McBride PLC Trading Update (1627B)
January 08 2018 - 2:00AM
UK Regulatory
TIDMMCB
RNS Number : 1627B
McBride PLC
08 January 2018
8 January 2018
McBride plc
Trading Update
McBride plc, the leading European manufacturer and supplier of
Co-manufactured and Private Label products for the Household and
Personal Care market, provides its trading update for the six
months ended 31 December 2017.
The Group starts its second half year with Household sales
growth prospects significantly ahead of expectations but at the
same time facing weak trading in the European Personal Care &
Aerosols division ("PCA") and ongoing cost inflation in the near
term. The combination of these factors means that the Board now
expects full year earnings to be broadly in line with the prior
year.
For the first half year, Group revenues at constant currency
declined 0.6%. Excluding sales from Danlind, which was acquired at
the end of September, underlying Household revenues were 3.4% lower
versus the same period last year, with growth in the UK and South
regions offset by ongoing decline in France and the negative impact
in Germany of the previously-disclosed major contract loss. This
reduction in revenues is now expected to be more than reversed
during the second half year.
Trading at our European PCA division has been more challenging
in the period and revenues declined 12.1%, approximately half of
which was due to deliberate management actions to exit certain
customer and product arrangements. As previously stated, we are
currently developing an accelerated transformation plan for PCA and
will provide more information in due course.
The lower sales levels and a number of mainly external cost
challenges, including raw materials, labour market pressures and
transportation costs, have impacted the Group's first half profit
performance, particularly within PCA, such that adjusted operating
profit for the first six months of the year will be lower than the
Board's prior internal expectations. The revenue and profit
performance of Danlind for its first three months as part of the
Group have been in line with our expectations at the time of
acquisition.
Looking ahead, the Group's growth prospects have been
significantly enhanced by recent business wins, mainly arising from
competitor weakness, with a number of major customers turning to
the Group for support. We anticipate that these opportunities will
lead to annualised high-single digit growth for the Household
business. These additional sales are anticipated to phase in
through the second half of the current financial year and Household
is now expected to deliver mid-to-high single digit underlying
revenue growth in the second half.
In order to capture this growth opportunity and support our
customers, the Group has decided to defer certain efficiency and
rationalisation initiatives planned for the current financial year,
given the resources required in the near term to meet the
anticipated rapid increase in volumes. The combination of the
trading performance in the first half, ongoing cost inflation and
the operational requirements of accommodating a significant level
of new business means that the Group's full year adjusted profit
before tax and adjusted EPS are now expected to be broadly in line
with the prior year.
Although challenges remain in the European PCA business, we
remain pleased with the sustained progress in our Household
division, where our "Repair, Prepare, Grow" strategy is now
delivering tangible benefits and the Board remains confident in the
successful delivery of the Group's strategy.
Rik De Vos, Group Chief Executive, commented;
"Whilst the accelerated growth opportunity we are now seeing is
an encouraging validation of the Group's strategy and the
positioning of our Household business, the immediate task of
accommodating such substantial growth presents challenges and
choices. Despite the near-term margin pressures we are
experiencing, we remain focused on delivering our medium-term
financial targets and we will re-initiate various efficiency
projects once this growth has been absorbed. Additionally,
restoring the performance of our PCA business, the plans for which
are under consideration, remains a top priority."
For further information please contact:
McBride plc
Rik De Vos, Chief Executive Officer 0161 203 7570
Chris Smith, Chief Financial Officer 0161 203 7570
FTI Consulting 020 3727 1017
Ed Bridges, Nick Hasell
Note: This announcement contains inside information which is
disclosed in accordance with the Market Abuse Regulation which came
into effect on 3 July 2016.
-Ends-
This information is provided by RNS
The company news service from the London Stock Exchange
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