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McBride's recovery enters new phase

The consumer goods supplier is preparing for growth, having done much of what it calls "the corrective work"
February 23, 2017

The ongoing recovery plan at consumer goods group McBride (MCB) is now firmly in its second phase. Chief executive Rik de Vos kicked off the 'Repair, Prepare, Grow' strategy more than two years ago and while a lot of the "corrective" work has been done, it's time to focus on growth areas. By implication, this means making clear-cut decisions regarding the underperforming divisions, too. To that end, McBride is evaluating offers it has received to buy its Aerosols business. Mr De Vos said disposals were always a possibility "from day one", and will continue to be if the board believes investment and resources could be better spent elsewhere.

IC TIP: Buy at 172p

Many of management's efforts over the last two years are clear to see in these numbers. True, constant-currency revenue contracted as the group exited low-margin business and streamlined its customer base, but a plethora of efficiency measures allowed operating margins to widen by 120 basis points to 6.2 per cent. That helps explain why half-year profit soared relative to a modest, not to mention euro-boosted, 4.8 per cent upward movement in reported revenue.

Analysts at Investec expect pre-tax profit of £34.5m for the year to June 2017, giving EPS of 13p, compared with £30.5m and 11.7p in FY2016.

MCBRIDE (MCB)
ORD PRICE:172pMARKET VALUE:£313m
TOUCH:171-172p12-MONTH HIGH:203pLOW: 125p
DIVIDEND YIELD:2.2%PE RATIO:15
NET ASSET VALUE:35p*NET DEBT:128%

Half-year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201534413.04.91.2
201636118.87.11.4
% change+5+45+45+17

Ex-div: 20 Apr

Payment: 26 May

*Includes intangible assets of £20.3m, or 11p a share