McBride to sink to half-year loss as cost surge amid supply chain disruption

·2 min read

Household cleaning products firm McBride has warned it expects to sink to a first-half loss as it battles to offset soaring prices due to the supply chain crisis.

The group, which is behind many supermarkets’ own-brand cleaning products, said raw material and packaging prices have ramped up faster than expected, while freight and distribution costs have also risen far higher than predicted and show no sign of slowing.

McBride is launching a second round of “substantial” price increases charged to customers across all its divisions – set to see in the region of “mid to high teen percentage” rises.

Despite raising prices, the group said it is expecting to slump to an underlying loss of up to £10 million in its first half, sending its under-pressure shares tumbling by 9%.

It did not provide a further update on the full-year outlook, having already warned in September that profits could tumble by up to 65%.

McBride said: “Since providing the company’s outlook for the current financial year on 9 September 2021, global supply chains have continued to tighten.

“Raw material and packaging costs have moved faster and to a higher level than previously expected.

“In addition, the shortage of haulage capacity and higher fuel costs has continued to substantially inflate distribution costs – again ahead of the board’s expectations – which show no sign of abating in the near term.”

The firm was left nursing an 18% slump in profits for the year to June 30 after seeing prices leap higher since early spring.

The Manchester-based firm – which also makes it own label products such as Oven Pride – said in August that, while it had agreed price increases with many customers, these rises will start later than McBride was hoping.

It said this meant the company will not be able to pass on the increased costs from its raw materials supply chains for some time.

Clive Black, an analyst at Shore Capital, said McBride was an “unsurprising casualty of input price inflation”.

He added that the scale of the price hikes McBride is looking to push through will likely mean an impact to consumers as well.

Mr Black said it “points to substantial inflationary pressure in the British and European retail systems, price rises that we expect to see more evidently realised on the shelf edge and in the inflation data in forthcoming weeks”.

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