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Household goods manufacturer McBride (MCB) has improved profits thanks to its new five-year plan but sales have declined more than £23m.
Adjusted operating profits rose 27% to £36.2m in the year to 30 June and adjusted pre-tax profits were up 35.5% to £29.4m.
A 5.3% increase in adjusted operating profit margin was slightly ahead of the projected 1% a year improvement outlined in McBride’s three-to-five year ‘Repair, Prepare, Grow’ strategy towards its 7.5% ambition.
A significant proportion of the increases were the result of cost savings across the business either in overheads or from structural buying improvements.
During the year all remaining actions under the UK restructuring project, announced in 2014, were completed, which is now delivering an annualised savings of £12m.
Full-year group revenues were 3.3% lower than a year ago at £680.9m, partly the result of range resets in the UK supermarkets as a number of SKUs were stripped from the shelves.
A weak euro for most of the financial year was responsible for about half of the headline decline. On a constant currency basis, sales were 1.9% lower, with household sales 1.9% down and personal care & aerosols down by 2.1%.
A key objective of the ‘Repair’ phase of the new strategy is to reduce the levels of complexity in the product portfolio. It is expected to reduce group revenues on an annualised basis by approximately £20m.
This initiative started in the second half of the year, pushing sales down £6m. However, overall volume levels were unchanged across the total group but the impact of ongoing price pressures in most of its markets continued to drive revenues lower.
McBride said this was most evident in the UK business, which saw pricing lower overall by about 4%. The group recorded lower volumes in the UK as a number of retailers reduced their SKU ranges in store and the deflationary pricing environment took a toll.
CEO Rik De Vos said: “I am delighted to report on the significant progress we have made in the implementation of the group’s strategy, only one year since it was launched. The encouraging financial results for the last year are an early demonstration of what this strategy can achieve and the board remains confident in the opportunity ahead as we now move into the ‘Prepare’ phase. The commitment and focus of the McBride team on the execution and delivery of our ‘Repair’ objectives has been outstanding and this remains critical for our future success.”
He added that trading in the first few month of the new financial year had been in line with expectations.
“Despite uncertainty in raw material pricing and foreign exchange rates, we look forward to delivering further good progress in our financial performance in the current year, consistent with our 3-5 year ambition.”
Shares in McBride have jumped more than 2% to 170p as investors responded positively to the improvements in the bottom line.
Morning update
There is no other news of note on the stock exchange this morning but all eyes will be on the extraordinary general meeting at Poundland later today to see if US hedge fund Elliott Capital will scupper the Steinhoff deal. Shares in teh fixed priced retailer have nudged up another (see below) 0.5p this morning to 224.5p.
The FTSE 100 has opened flat this morning at 6,825.92 points.
Yesterday in the City
Poundland (PLND) shares held up yesterday ahead of today’s crunch shareholder vote on the potential Steinhoff takeover. The stock crept up 0.2% to 224p, just below the 227p a share offer, which includes a 2p dividend, by the South African firm. Doubts have set in about whether US hedge fund Elliott Capital, which has built up its own near-23% stake in Poundland in recent months, will vote the deal down.
Elsewhere it was a fairly quiet day on the markets for food and drink with little news flow.
Applegreen (APGN), which reported buoyant first-half results, fell 0.7% to 385p despite sales jumping more than 7%. The share price is still almost 30% on the float price back in June 2015.
The FTSE 100 fell 0.8% to 6,826.05 points, defying the rally for global stock markets. The blue-chip London index was held back by the strengthening pound as fears about the impact of Brexit eased.
Risers included Ocado (OCDO), up 1.9% to 319.8p, Booker Group (BOK), up 1.2% to 182.5p, and WH Smith (SMWH), up 0.6% to 1,613p. Fallers included Greencore (GNC), Britvic (BVIC) and Unilever (ULVR).
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