UK-based cleaning products maker McBride has said that its annual earnings will likely be hit by an 'exceptional' rise in costs of raw materials and distribution challenges, due to a shortage of lorry drivers.
The company said it expects adjusted pretax profit for the year ending June 30, 2022 to be 55%-65% lower than the current analyst consensus for fiscal 2021.
Raw Material Environment
'Although only seven weeks into the new financial year, the previously highlighted raw material environment remains extremely challenging both in terms of exceptional price increases and supply availability,' the company said in a statement.
'More recently, and in line with the general trading environment experienced by others, the group has also started to experience distribution challenges, particularly in the UK and Germany as a result of the shortage of Heavy Goods Vehicle (HGV) drivers, which has impacted upon both transport availability and cost.'
Increased Prices
McBride said it had agreed with customers over price increases, which would be implemented later than initially targeted. It said that it is seeking a variable pricing surcharge to sales contracts, based upon certain key commodity prices.
It will announce its full year results for the year ending 30 June on 7 September 2021.
In terms of the first half of full-year 2021/22, the group said that it expects to see EBITDA at an approximate break-even level, 'with profits therefore heavily weighted towards the second half of the year, with the business exiting the year with run-rate profit levels in line with the average of the last few years.'
It added that it continues to operate within its banking convenants, and that its liquidity and cash flow remain 'robust'.
The group recently announced progress in its 'Compass' strategy, which is aiming to streamline the business into a leaner, more targeted organisation.
News by Reuters, additional reporting by ESM. For more Private Label news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.
