Trading Update

RNS Number : 8336K

McBride PLC

30 June 2014

 



30^th June 2014

McBride PLC

Trading Update

McBride PLC, Europe's leading provider of Private Label Household and Personal Care products, today provides an update on trading for the year ended 30^th June 2014 prior to entering its close period, and is also communicating an update with regard to the strategic review of its UK business.

The Board expects to report adjusted operating profit and net debt for the year just ended in line with its expectations indicated by the previous trading statement.

Group full year revenue on a constant currency basis is expected to show a decline of 3% as previously announced.  Private Label revenue was flat with continued growth in our France/Benelux, Poland and Germany businesses, the latter driven by significant new business wins, offset by the effects of the weak retail environment in the UK and Italy and continued increased branded promotional activity.  Contract revenue declined by 20% as expected due to the winding down of certain contracts.

As previously announced, and in response to a deterioration in the retail environment in UK, the Board is conducting a wide-ranging strategic review of its UK business.  The Board is today announcing further opportunities to restructure the Group's activities, remove un-profitable business and reduce capacity in the UK in order to improve profitability.  Savings of around £12 million are expected to be delivered in full by June 2016 with around £3 million benefitting FY15.  Associated cash implementation costs are expected to be around £14 million.  Regrettably, it is expected that, of a workforce of 1,600 in the UK business, around 400 positions are expected to be made redundant.  Consultation with affected employee groups will start immediately.

As a consequence of the review, the Board expects to impair the value of assets in UK by £21 million, including £6 million of goodwill, in the current financial year.

In addition, the Group expects to incur material one-off costs in relation to two matters.  The implementation of the European Classification, Labelling and Packaging regulations will lead to exceptional costs of around £4m as a consequence of the need to re-configure the labelling of almost all the Group's products.  The Group is also expected to take an exceptional charge of £2.5m in relation to a long term environmental remediation plan at a site in Belgium.

For the 2015 year, underlying growth in Group revenue of 2% is expected, although this will be offset by the exiting of un-profitable business as part of the UK re-structuring.  Net debt at June 2015 is expected to be in the range £105 million to £110 million, leaving significant headroom within the Group's borrowing facilities. Total exceptional charges will amount to around £37 million in FY14 and £7 million in FY15, including the impairment noted above and final costs in relation to existing savings programmes.

The Group intends to announce its preliminary results for the year ended 30^th June 2014 on 10^th September 2014.

Chris Bull, Group Chief Executive Officer, commented:

"We are announcing a robust plan that will help restore our UK profitability.  We will exit some business in non-core un-profitable categories, but our capacity to meet growth opportunities in our core categories remains unaffected.  We will be entering into full and meaningful consultation with colleagues affected by these proposals".

For further information please contact:

McBride plc
Chris Bull, Chief Executive	020 3642 1587
Richard Armitage, Group Finance Director	020 3642 1587
FTI Consulting
Ed Bridges, Nick Hasell	020 3727 1017

 

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