UK: McBride to cut jobs as costs bite 04/09/2008 - 15:14:41
Private label household goods firm McBride today said it planned to axe one-tenth of its UK workforce as “unprecedented” cost inflation bears down on profits.
The company, which makes products such as laundry liquids, mouthwash and toothpaste for supermarkets, has been hit by surging oil prices.
It is set to cut 250 jobs from its 2,500-strong UK workforce under an overhaul of its UK manufacturing sites to cut costs.
McBride is closing its Coventry base and scaling back its Warrington presence in order to move to a new site in St Helens. It hopes to save £1m (€1.2m) a year in overhead costs through the shake-up.
While McBride said it had taken “firm action” to pass on the higher input costs to its customers, underlying pre-tax profits fell 38% to £19.7m (€24.3m) in the year to June 30, sending shares 7% lower.
In the UK, operating profits slumped to £15.2m (€18.7m) from £24.5m (€30m) in the previous year.
But chief executive Miles Roberts said he was confident over this year’s prospects as McBride drives further savings and hard-pressed shoppers trade down.
“Our products deliver outstanding value and quality to consumers across Europe and have never been more relevant than in the current environment where disposable incomes are under significant pressure,” he added.
Discounting previous acquisitions, the firm’s UK revenues fell 4% last year - due to lower household goods sales as the group cut back on promotional activity - but personal care goods saw underlying sales up 4%, led by strong sales of male grooming and skin care products.
Despite the pressure from higher selling prices, the group also invested in manufacturing sites in Burnley and Bradford.
Managing volatile input costs is a “critical objective” for the group this year, but McBride has gained some help from a stronger euro in other markets.
Although it faced “very challenging” conditions in western Europe due to wider economic uncertainty, its revenues rose 30% to £395.4m (€487m), aided by acquisitions and an 8% beneficial currency effect.
In faster-growing eastern European markets, a stronger Polish Zloty also helped push operating profits up by more than a third.
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