Join our community of smart investors

Personal care takes a bite out of McBride

The personal care segment is struggling to manage an inflationary cost base
February 23, 2018

A pre-emptive profit warning in January means McBride (MCB) shares held up in the face of a 30 per cent fall in half-year adjusted pre-tax profits. As expected, the personal care business is struggling to manage an inflationary cost base, but management believes it has a strategy to return the group to a break-even point within 18 months. Costs are also rising for the household segment where recent acquisitions have delayed specific cost reduction plans, although a slew of new business wins means bosses are confident sales will continue to grow.

IC TIP: Hold at 155p

But is the market running out of patience when it comes to giving McBride the benefit of the doubt? The shares have lost approximately a third of their value since the start of the year, and analysts at Peel Hunt have said the company’s debt levels are “higher than expected”. That debt figure largely reflects the recent acquisition of Danish auto-dishwash and laundry product supplier Danlind, but exceptional cash costs relating to ongoing recovery at the personal care business are only expected to add to the pile.

Analysts at Peel Hunt expect pre-tax profits of £34m for the year ending June 2018, giving EPS of 13p, compared with £34.6m and 13.1p in FY2017.

MCBRIDE (MCB)   
ORD PRICE:155pMARKET VALUE:£282m
TOUCH:155-157p12-MONTH HIGH:235pLOW: 151p
DIVIDEND YIELD:2.8%PE RATIO:na
NET ASSET VALUE:35p*NET DEBT:192%
Half-year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201636118.87.11.4
20173684.00.71.5
% change+2-79-90+7
Ex-div:**   
Payment:**   
*Includes intangible assets of £27.7m, or 15p a share 
**The half-year dividend will be paid in May using the company's B share scheme