McBride warns on profits as lorry driver and materials shortages drive up costs

A company behind many supermarkets’ own brand cleaning products has failed to pass its rising costs on to customers in time to avoid a hit to its profit.

McBride, which has its headquarters in Manchester, said it had agreed price increases with many of the retailers that are among its customers.

But the price rises will start later than McBride was hoping, the business told shareholders on Thursday.

It means the company will not be able to pass on the increased costs from its raw materials supply chains for some time.

The costs are unchanged from previous estimates, bosses said.

“The previously highlighted raw material environment remains extremely challenging both in terms of exceptional price increases and supply availability,” McBride said.

“More recently, and in line with the general trading environment experienced by others, the group has also started to experience distribution challenges.”

It said that getting hold of enough lorry drivers in the UK and Germany has proven a problem, hitting both the availability of transport and the cost.

The board of McBride said it expects adjusted pre-tax profit to be around 55% to 65% lower than the £19.7 million forecast by analysts this year.

Net debt will also be around 5% to 10% higher than expected, McBride said.

Shares in the company felt the pressure following Thursday’s announcement, dropping by more than 18% at one point.

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.

Earlier this week, fast food server Nando’s was forced to close around 50 sites because it was struggling to get enough chicken to feed customers.

“McBride is putting up prices, but these will take effect later than hoped, at least from the company’s point of view. Consumers – and central bankers – will take note, as that means price increases further down the line for them to meet or at least mull over,” said AJ Bell investment director Russ Mould.

“McBride’s role as a contract manufacturer, or at least a maker of own-label cleaning agents for retailers, means it does not have any pricing power from brands, as it has no brands of its own. Many of its customers are larger and have more muscle when it comes to pricing discussions. And there are other suppliers who can be used as a bargaining chip by customers for good measure.”