McBride has blamed rising raw material costs and weak retail markets on a 24% fall in first-half profits.
Total revenues in the six months to the end of December grew by 2% to £407.9m. However, profits at the own-label household and personal care manufacturer £20.2m over the period.
The company said the drop was partially caused by a lag in recovering previous increases in input costs. But it insisted the conclusions of its ‘Refresh’ strategy review to re-structure its supply chain would reap long-term rewards.
“We have delivered good results in a challenging environment of increasing raw material costs in all geographies and weak retail markets, particularly in the UK,” said chief executive Chris Bull.
“Our strategy review has identified significant opportunities to deliver shareholder value through focusing investment on growth categories, strengthening our relationships with key customers and improving our cost efficiency.”
Implementing the recommendations of the strategy review would lead to one-off costs this year of £20m, Bull added, but would bring annualised benefits of around £11m in the coming years.
Shore Capital analyst Clive Black said the pressure on McBride to recover costs represented “a common weakness of the private label business model compared to FMCG groups with leading brands and pricing power”.
He warned that Shore had downgraded its estimate for full-year profits at McBride from £35.4m to £28m.
Finance veteran Carr joins McBride as non-exec (28 January 2011)
McBride wary of retail 'uncertainty' (6 January 2011)