Having structured a “repair, prepare and grow” plan since 2016, its understandable that McBride wanted the shock of its current year downgrade to dealt with ahead of today’s interim results. Yet a profit warning 24 hours before a results announcement is an unusual, and some would think, absurd way of getting the bad news onto the table. It is untimely during the main phase of the “Growth” period scheduled to end in Q419.
There is not much discussion of strategy in today’s detailed interim report, although the European PC Liquids sale was completed and Danlind was integrated into McBride’s systems. Announcing continuing pre-tax profit flat at £14.5m on revenue an underlying 6% up at £369.2m, the company has seen operating margin lose 40bps to 4.6% as a result of the cost pressures it flagged yesterday. Raw material prices are actually moving lower in the second half, but not as far as expected. Also distribution costs are 16% higher on rate and capacity issues that continue.
Sales in the major Household division are ahead 5.9% with highlights in auto-dishwash (+26.5%) and laundry capsules (+12.1%). Regionally, underlying revenue was rescued by Eastern Europe, up 23%, while UK gains of 11% were countered by declines at the same rate in Northern Europe.
The balance sheet at least is in good shape. Following the disposal of European PC Liquids, net debt is down £16.3m to £98.0, which gives debt cover of 1.8x against covenants of 3.1x, and undrawn facilities of £97m.