Consumers are still taking to retailers' own label products, which is good news for McBride, which supplies supermarkets like Tesco and Sainsbury with their deodorants, dishwasher tablets and shampoos.
The company has issued a trading update for the four months to yesterday, saying its performance was ahead of the board's expectations. Revenues rose 7%, aided by the group's move to supplying more higher value products. The news has pushed McBride's shares up 23.9p to 224.6p, making it the biggest riser in the mid-cap index.
In a buy note Investec said:
The better than expected performance has come from the operating margin which is benefiting from an improved mix. In the second half last year, the UK margin declined over that achieved in the first half, but this has started to pick up again now. Overall, the group margin achieved in the first four months was better than the second half margin of 5.5%.
In our previous 2010 estimates, we had been conservative in our assumptions as the oil price had started to move ahead, and assumed a 5% operating margin for the year overall. We are reviewing this in light of today's update and also in light of further visibility on raw material costs. We now feel comfortable that the group should at least match the 5.5% margin achieved in the second half of 2009. We therefore expect to increase our earnings before interest and tax estimates from £41.5m to around £47m.
