McBride hit by lorry driver shortage and higher costs
Household cleaning products firm McBride has been left nursing an 18% slump in profits due to “unprecedented” material price increases as the lorry driver shortage and supply chain issues take their toll.
The group, which is behind many supermarkets’ own-brand cleaning products, posted underlying pre-tax profits of £19.9 million for the year to June 30, down from £24.2 million the previous year.
It said it has seen an “exceptionally fast escalation in input costs” since early spring, with cardboard costs more than 50% higher than they were a year ago and certain solvents more than 300% higher.
McBride expects the peak of the cost pressures in the autumn and is having “urgent” discussions with retailers as it seeks to protect its margins by increasing prices, while it is also cutting costs by £10 million.
The size of cost increases in materials including plastics, cardboard and surfactants is unprecedented, and is coupled with challenges with freight availability and costs adding further inflationary pressuresMcBride
The group said: “The severe challenges seen across industries with supply chain shortages have heavily impacted McBride.
“The size of cost increases in materials including plastics, cardboard and surfactants is unprecedented, and is coupled with challenges with freight availability and costs adding further inflationary pressures.”
McBride kept its 2021-22 outlook unchanged after warning last month that profits could tumble by up to 65%.
The Manchester-based firm – which also makes it own label products such as Oven Pride – said in August that, while it had agreed price increases with many customers, these rises will start later than McBride was hoping.
It means the company will not be able to pass on the increased costs from its raw materials supply chains for some time.
McBride is one of many companies being forced to deal with a shortage of lorry drivers and pressures in supply chains that are making raw materials more expensive and difficult to get hold of.
Housebuilder Vistry also said on Tuesday that it is seeing costs surge for certain construction materials.
McBride said the past financial year’s performance was further affected in the final six months by a slowdown in demand for cleaning products after booming sales at the start of the pandemic.
Following sales growth of 1.7% in the first half, second-half revenues dropped 9.5% compared with a year earlier.
Cleaning product growth swung from an 11% jump in the first half to an 11% fall in the following six months.