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McBride – now expects “broadly in line with the prior year”. Why no mention of prior forecasts I wonder!

By Steve Moore | Monday 8 January 2018


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


A “Trading Update” from household and personal care products manufacturer McBride (MCB) commences that “the group starts its second half year with Household sales growth prospects significantly ahead of expectations”. Good news then? Er, the shares are currently circa 10% lower heading towards 200p…

This is as “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” and “weak trading in the European Personal Care & Aerosols division and ongoing cost inflation”.

The European Personal Care & Aerosols position is seeing the company consider it necessary to be “currently developing an accelerated transformation plan”, whilst raw materials, labour market pressures and transportation costs challenges are specifically mentioned.

The company anticipates a phasing in towards high-single digit growth for the Household business – noting prospects recently “significantly enhanced” by business wins, “mainly arising from competitor weakness, with a number of major customers turning to the group for support”. Then again though, at its 24th October AGM the board was “comfortable that the business remains on track to deliver its full year expectations”, but “the group's full year adjusted profit before tax and adjusted EPS are now expected to be broadly in line with the prior year”.

This is £34.6 million and 13.1p respectively – comparing to more than £40 million and 15.5p previously forecast. Why did the company not state those? Anything to do with that “broadly in line with the prior year” is in fact a quite significant profit warning?

With the European PCA business and cost inflation challenges (along with a net debt position), the Household business looks to need to be “significantly enhanced” indeed to mitigate. Thus, certainly at least until there is hard evidence of reignited bottom-line progress, I avoid.


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