McBride, the provider of private label household products to major retailers, has vowed to focus on “manufacturing excellence” and “provide a platform to deliver growth”, following a strategy review.
The outcome of the review came with the publication of its results for the year ended 30 June in which it bounced back into the black with £2.6m pre-tax profit, up from a loss of £21.3m last time on revenue down 5.4% from £744.2m to £704.2m.
UK revenue fell 4.8% from £259m to £246.5m, attributed to price reductions, lower private label volumes and a fall in contract manufacturing volume.
Trading profits in the UK, however, improved from £4.2m to £14m as a result of a net benefit from lower input costs offset by price concessions to customers, foreign exchange benefits from the weaker Euro, lower depreciation and the benefits of the UK restructuring project.
The group said that following its strategic review, its ambition was to become “the leading European manufacturer and supplier of co-manufactured and private label products for the household and personal care market through selected channels and markets” after several year of disappointing returns.
It said it had entered into a transformation phase under a new management team driving a new strategic direction that aimed to optimise activities, “maximising the leverage of its scale to deliver our growth and ambition and value creations”.
This would be known as “Repair, Prepare, Grow” over three to five years – aiming to achieve adjusted operating profit margin of 7.5% EBITA and return on capital employed targeted at 25%-30%.
McBride said this would be based on four building blocks: customer oriented service agreements aligned with channel requirements; manufacturing excellence with customer integrated supply chain networks; maximising manufacturing efficiencies through structural supply agreements and focusing on the development of personnel, organisational capabilities and skills.
The company said during the past financial year it had taken action on £3m worth of overhead cost reduction opportunities; defined targets supporting simplification of the business that would result in a 30% reduction in SKUs and a focus on the top 20% of its customers; set targets for overhead reductions resulting from the lower complexity; started reviews of underperforming segments of the group, implemented the closure of loss-making Chinese activities and accelerated purchasing cost initiatives driving form the simplification of the SKU base.
McBride said it had made a “satisfactory” start to the new financial year with the benefits of cost reduction programmes evident. Rik De Vos, chief executive, said: “We have commenced our transformation plan and the McBride team is now embarking on a period of change to reposition McBride for a more sustainable future.”
Iain Napier, chairman, added: “Together with the new executive leadership team, the board is confident on the delivery of the new strategy.”
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