Budget cleaning products maker McBride PLC LON:MCB is one of those FTSE constituents (FTSE All Share, FTSE Small Cap) that doesn’t make the headlines very frequently and because of that it largely tends to go unnoticed by investors.
But its share performance makes it more than worthwhile having another look. The Manchester-headquartered firm’s shares rose 200% in 2023 and since the start of the year its stock rallied another 39% as the company quietly focused on cutting costs, value label sales in Europe, and expanding into new markets.
McBridge has emerged stronger post inflation, has readjusted its strategy to include an expansion into Asia and found ways to create value beyond its core production.
What does McBride do?
McBride makes cleaning products such as dishwashing powders and detergents, both as part of contract manufacturing activities for other companies and its own private labels. Part of its range are value personal care products and cleaning products used by institutions like the NHS.
After a post-Covid dip in revenue and in share value during 2021 and 2022 the company made a turnaround last year as its budget private label products attracted consumer attention because of cost-of-living issues and as some large retailers focused on stocking more of the company’s products.
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Both in 2023 and since the start of this year the company’s products: cleaning, laundry, dishwasher tablets and cleaners, managed to gain ground against their peers. The newly acquired share of the private labels market in various European countries and the signing of new contracts last year will ensure that the company’s strong performance continues into 2024. On top of that McBride envisages creating further growth in Asia-Pacific with new sales in Australia and Malaysia. The company is also seeing positive margin performance thanks to last year’s pricing actions.
In its latest trading update in January McBride said that it expects a 10% growth in its financial year 2024 with strong private label demand driving significantly improved profitability and volume growth.
Crunching the numbers
In the financial year 2023, which ended in June 2023, revenue increased by 31% with growth slightly tempered by rising costs of labour, distribution, and logistics. Prior to that the strongest price pressures stemmed from raw materials.
In the last financial year the company’s overall volumes of sales dropped slightly as consumers chose more frugally but its private label sales outperformed the market, particularly in the dishwasher sector. McBride kept costs on a tight leash while focusing on expanding some of its divisions such as Unit Dosing. Unit Dosing, if you are curious, is a division of the company which makes dishwasher and detergent tablets as opposed to loose powder.
As for its other units, the firm launched several new initiatives in European countries, such as a brand of “made in France” aerosol in France. In Asia-Pacific the company started selling its first products in Australia and focused on personal care and household products in Malaysia.
In addition to that McBride is in the midst of a five-year transformation programme that is designed to deliver more than £50 million in net benefits.
With its strategy in place for 2024 and beyond McBride looks set to clean up more than just laundry.
