23rd Feb 2021 13:37
(Alliance News) - McBride PLC on Tuesday posted significant profit growth with strong revenue growth from Household Contract Manufacturing and set out its dividend policy under a new strategy.
The London-based cleaning products manufacturer posted a GBP13.5 million pretax profit for the six months ended December 31, more than twice the GBP6.6 million profit a year before.
This came as revenue rose 3.6% to GBP362.9 million from GBP350.4 million the previous year, including a 24% rise in Household Contract Manufacturing thanks to "a laundry capsules contract gain with a brander and strong growth in auto-dishwash, washing up liquid and cleaners, the key product categories that have been growing since the Covid-19 pandemic first impacted our key markets."
Chief Executive Chris Smith said: "The company's consumer end-markets continue to be both buffeted and enhanced in different ways by the Covid-19 environment making demand levels more variable than usual. As anticipated, we have seen input costs start to tick up but overall the board's expectations for the full year remain in line with our December trading update."
The company also announce a new strategy called 'Programme Compass', which was implemented at the start of 2021 and involves reorganising McBride into five divisions: Liquids, Unit Dosing, Powders, Aerosols and Asia Pacific.
The new structure, McBride said, provides focus and accountability for delivering group five-year targets, including the growth of annual revenue to EUR1 billion and increasing earnings before interest, tax and amortisation margin by 2 to 4 percentage points. It will aim to grow return on capital employed by 5 to 10 percentage points in the same five-year period.
As part of its strategy reset, McBride will review its dividend policy, having proposed no interim dividend in either its most recent half-year or the year before.
McBride explained that: "As part of Programme Compass, the group has evaluated its capital allocation policy. Going forward, the focus will be investing in profitable growth, whilst also targeting a net debt/Ebitda ratio of 2x or less (on an accounting basis). Where this target is achieved, the group will return capital to shareholders under the group's new dividend policy."
At a net debt to earnings before interest, tax, depreciation and amortisation ratio of 1.5 to 2.0 times, it will pay out a dividend at an annual pay-out level of a sixth of earnings per share. At 1.0 to 1.49 times, an additional distribution of a sixth of EPS may be paid as a dividend or a share buy-back, or cash could be retained. Below this debt to Ebitda ratio, a special distribution could be paid at the board's discretion.
Shares in McBride were up 2.7% at 84.00 pence in London on Tuesday afternoon.
By Anna Farley; [email protected]
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