Jobs at risk as McBride profits slump

McBride has posted a 42 per cent drop in annual profits, after its performance was hit by higher raw material costs.

The company said it planned more price rises after its profits were also hammered by fierce competition from its branded rivals.

McBride said it proposed to get rid of 300 posts, although a company spokesman stressed that a consultation process was under way and it was too early to say how many people would be made redundant.

In a statement, the company said: “Following comprehensive cost saving reviews across all UK sites, a further 40 staff including operational staff at the Bradford site, and administrative and personnel staff at divisional headquarters, will be leaving the business.”

A company spokesman said it was not known how many jobs would be lost in Bradford, where McBride employs 370 staff, because talks with staff were ongoing. The company warned that the short-term outlook remained tough.

The group, which supplies companies such as Tesco and Carrefour with goods ranging from dishwasher tablets to deodorant, said it made an operating profit before one-off items of £29m in the year ended June 30, in line with analysts’ expectations.

Manchester-based McBride, said one of its key objectives this year would be to offset raw material increases through higher selling prices and lower costs.

The time lag in recouping its higher input costs contributed to operating profits tumbling by £21m to £29m in the year to June.

Pre-tax profits fell even harder, by 76 per cent to £7.1m, as it accounted for the costs of an efficiency drive, including £9.2m for the expected loss of 340 positions through the planned closure of a household liquids factory in Burnley. Production will be switched to other plants in the North West, McBride said.

Sales increased by one per cent to £812.4m, with central and eastern Europe offsetting the UK and rest of Europe, where the consumer squeeze hit hard.

UK revenues fell by three per cent to £310.7m, with retail sales down by five per cent as branded competitors discounted heavily to maintain their market share.

Contract sales rose by three per cent with “core” products such as washing liquid sachets, gels and speciality cleaners seeing strong growth. Chief executive Chris Bull said trading since June had been in line with expectations, though raw material prices have continued to rise both on the manufacturing side and in packaging.

He said that McBride would pull out of businesses where it was not able to recoup higher costs.

Analysts said the figures were in line with consensus forecasts. Damian McNeela at broker Panmure Gordon said that the outlook for consumer spending was fragile in Western Europe and costs were still rising, albeit more slowly.

He has maintained his forecast of flat annual operating profits of £30m to June 2012.

The company said yesterday: “Although a weak consumer environment and raw material inflation will continue to present a challenge in the short term, we remain focused on growing shareholder value through the rigorous execution of the Refresh strategy.”

Refresh refers to the company’s cost-cutting programme. The full-year dividend was kept at 6.8p a share.

Mr Bull said yesterday: “We have delivered a robust sales performance in a very challenging environment.

“In Western Europe, private label share of our main categories has held up despite aggressive competition from branded competitors.

“We have delivered strong sales growth in central and eastern Europe, and we are making good progress in Asia.

“Raw material inflation has continued into our new financial year and our actions to recover it are ongoing, but where this has not been possible in the current weak trading environment, we are exiting non-profitable business.”

The company also announced yesterday that Colin Smith, who has been a member of the board since April 2002, will stand down after the conclusion of the next annual general meeting. Mr Smith is currently senior independent director and chair of the audit committee. Bob Lee will become the company’s senior independent director and Jeff Carr will assume the position as chair of the audit committee.