McBride's (MCB) stock barely moved on the release of these half-year numbers – thanks to a last-minute profit warning on the prior day which wiped 30 per cent off the share price. As warned, costs have continued to rise for the manufacturing business, which explains why an 11 per cent improvement in total group sales over the six months to December 2018 failed to generate any meaningful profit growth.
A slower recovery in raw material prices and higher distribution and logistics costs mean full-year adjusted pre-tax profits before tax will now lag the last financial year by 10 to 15 per cent. Broker Numis had expected to see pre-tax profits of £38m for the year ending June 2019, which would give EPS of 14.8p, but has placed its coverage under review in the wake of the warning.
Management intends to mitigate these challenges by implementing price rises and through “rationalising” overheads. But bosses admit they are “concerned” by the lack of clarity the business faces as a result of ongoing Brexit negotiations. Immediate challenges from a ‘no-deal’ scenario would include higher costs to import raw materials, new customs tariffs and potential port delays. And even though the UK accounts for less than a third of group revenues, post-Brexit regulatory changes could cause further upheaval.
| MCBRIDE (MCB) | ||||
| ORD PRICE: | 88p | MARKET VALUE: | £160m | |
| TOUCH: | 87.5-88.2p | 12-MONTH HIGH: | 164p | LOW: 86p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 44 | |
| NET ASSET VALUE: | 39p* | NET DEBT: | 139% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)** |
| 2017 | 334 | 13.2 | 4.9 | 1.50 |
| 2018 | 369 | 13.3 | 5.0 | 1.50 |
| % change | +11 | +1 | +2 | - |
| Ex-div: | 26 Apr | |||
| Payment: | 31 May | |||
| *Includes intangible assets of £30m, or 16p a share | ||||
| **Payments are made by way of the issue of 'B' shares in place of income distributions | ||||
