McBride Plc - Full year trading update
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Full year trading update
McBride plc (the "Group"), the leading European manufacturer and supplier of Private Label and Contract Manufactured products for the domestic household and professional cleaning and hygiene markets, today provides a trading update for the year ended 30 June 2021.
Adjusted operating profit and adjusted profit before tax for the year are anticipated to be in line with current market expectations.
We continue to experience the uneven levels of demand noted in our May trading update. The impact of Covid-19 lockdowns on consumer behaviour has seen a continuation of weaker laundry volumes and stronger demand for cleaners and dishwasher products in the second half, although demand for cleaners and dishwasher tablets softened in the final quarter. These weaker run rates, coupled with short-term consumer stockpiling in the comparative period in the early stage of lockdown in 2020, have resulted in lower second half revenues and full year revenues at constant currency 4.0% lower than the previous year. In the divisions, Powders was significantly impacted with sales declining 16%, reflecting the effect of low laundry volumes both to consumer and professional markets, with sales in the other divisions declining by much smaller amounts.
The raw material environment remains challenging, both in terms of supply availability and exceptional price increases. The Group continues to discuss margin recovery actions with our customers, mostly across liquids categories. Our approach has been to apply an immediate variable pricing surcharge to sales contracts, based upon certain key commodity prices, with discussions and finalisation ongoing at this time.
Net debt (including IFRS 16) closed at circa £119m (30 June 2020: £101.5m), in line with our internal expectations. As highlighted at the interim stage, the increase in net debt includes a circa £15m impact from a return to more regular levels of working capital following the exceptionally low inventory levels at 30 June 2020 following destocking as a result of Covid-19. Debt cover on an accounting basis is expected at approximately 2.6x and hence under our new capital allocation policy, as announced on 23 February 2021, the Board does not expect to propose a final dividend for the year ended 30 June 2021.
Banking covenants on debt cover are expected to be approximately 1.4x, well within our covenant limit of 3.0x. The Group continues to have material headroom against its revolving credit facility of €175m.
The Group will announce its preliminary results for the year ended 30 June 2021 on 7 September 2021.