Price pressures ease for own-label supplier McBride

Chris Bull
Chris Bull
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Price pressure on own-label household goods may be easing after a major supplier said raw material costs have stabilised.

McBride, which supplies own-label products such as toothpaste and detergents to the UK’s top supermarkets, said its policy to push through price rises to offset higher input costs is nearing its end.

The group, which has factories in Bradford and Hull, has had to fight off heavy promotions from branded rivals.

The firm’s three European businesses returned to growth in the three months to October 23, including the UK where sales fell by three per cent in the previous year.

The own-label laundry liquids and mouthwash firm said revenues overall rose by two per cent during the period, led by central and eastern Europe.

Chief executive Chris Bull said the firm’s initiatives to recover cost increases are “progressing towards completion”, but it is pulling out of non-profitable products where it has not been able to pass on higher prices.

Prices for key raw materials such as palm kernel oil and coconut oil have fallen sharply this year, though in other areas such as plastics for packaging, costs have stayed high.

McBride typically supplies its customers on three-month contracts and faces a time lag between its raw material prices going up and renegotiating new prices.

Damian McNeela, an analyst at broker Panmure Gordon, said that McBride should now begin to benefit from a generally improved cost environment.

She added that the squeeze on consumers should allow private labels to gain market share, which would help McBride.

Shares in McBride rose eight per cent to 126.25p last night, a rise of 9p.

Investec analysts said in a note: “We have not seen any renewed cost inflation and recovery of last year’s increases progresses.

“The first half will face some tough comparatives from last year, but on current trends, we should see profit progression resume in the second half.

“All in all a steady quarter, in our view, but with some early encouraging trends on costs and pricing. If these are maintained we expect to see some better margins and profitability emerge in the second half.”