Shares in McBride plc (LON:MCB) took a tumble on Monday morning after the personal care and cleaning products manufacturer warned on full-year earnings.
The company – which makes things like toilet bleach, washing up liquid and washing capsules and sells them under retailers’ own brands – said weak trading in its European personal care and aerosols division coupled with ongoing cost inflation had hit first-half revenues.
Issues in France and Germany
Total sales fell 0.6% in the six months ended December 31, while underlying household revenues dipped 3.4% compared to a year earlier, driven by the ongoing decline in France and the loss of a major contract in Germany.
McBride said it was in the process of developing an “accelerated transformation plan” for its personal care business, which saw sales slump 12.1% in the six month period.
Half-year profits will be hit by the sales slowdown, with the company now expecting adjusted operating profits to be below its prior expectations.
It does expect the reduction in revenues to be “more than reversed” during the second half of the year, which means full-year revenues and profits should be broadly the same as last time around.
That’s a far weaker performance than the 15% of top line growth City analysts had been looking for this year.
Household division performing well
McBride bosses did try and put a positive spin on the opening six months of the year, claiming that recent business wins – arising from “competitor weakness” – from major customers are expected to boost revenues in the household business.
The company sees revenues in that particular division growing by mid-to-high single digits in the second half on the back of those wins.
‘Challenges and choices’
“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,” said chief executive Rik De Vos.
“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.”
Shares dived 16.4% to 186p early on Monday.