McBride H2 2025 Earnings Report

McBride EPS Results

• Actual EPS: GBX 22.10
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

McBride Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

McBride Announcement Details

• Quarter: H2 2025
• Date: 9/17/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, September 18, 2025
• Conference Call Time: 9:30AM ET

We are the leading European manufacturer and supplier of Private Label and Contract Manufactured products for the domestic household and professional cleaning and hygiene markets.

McBride H2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Robust financial performance with volumes up 4.3%, EBITDA margin sustained at 9.3%, and net debt reduced to £105 million, strengthening cash flow and liquidity.
• Positive Sentiment: Reinstatement of an annual dividend of £0.03 per share for the first time in over five years, reflecting board confidence and enhanced shareholder returns.
• Positive Sentiment: Transformation program on track—SAP S/4HANA rollout and commercial/service‐excellence initiatives are delivering early benefits toward the £50 million net savings target by 2028.
• Positive Sentiment: Private-label market share has risen to 35.5%, driven by outperformance in dishwashing and laundry liquid categories, with continued share gains in major European markets.
• Negative Sentiment: Ongoing input‐cost inflation and retailer cost-out pressures pose margin risks, although disciplined price and mix management seeks to preserve profitability.

Presentation

[Hannah Scott, Director - UK at Instinctif Partners]

Good afternoon, and thank you to those of you who are joining us. There are quite a number of you, so if you just bear with us, we'll allow everyone into the meeting. Great. Okay. Thank you for joining us this afternoon. We're here to hear from McBride PLC, who announced their results earlier this week. Today, we're going to have a brief introduction followed by a video, and then on to the main bulk of the results presentation, which was shared with analysts earlier this week. We will have an opportunity for Q&A at the end. Please feel free to submit them as we go through the presentation, and we will take as many as we can in the time that we have allocated, which is the hour. Without further ado, I will hand over to Chris Smith.

[Chris Smith, CEO & Director at McBride plc]

Thanks, Hannah. Good afternoon to everyone. Thank you for joining this call. As Hannah said, I'm Chris Smith. I'm the CEO. I've been with the group coming up for 11 years now. I'm joined here today by Mark Strickland, who's our CFO. He's been with the group around five years. First of all, I'll kick off with a very rapid introduction to McBride for those of you who don't know anything about us. We have a small corporate video which explains a bit more, and then we will, as Hannah says, rattle through the results presentation we gave yesterday. This is McBride on a page. We are the number one, the leading supplier in our space across Europe of household cleaning products. We're all coming up for 100 years old. We are a pan-European business. We are not just a UK business. Our heritage is UK.

[Chris Smith, CEO & Director at McBride plc]

We're coming up to, you know, 1927. It was formed in Manchester. We now have something between 3,500 and 3,600 people across 18 locations and 13 countries selling over a billion consumer units to our customers, which are predominantly retail customers. You'll see here on the bottom left, 84% of our business is what we call private label or white label. This is, and I'll come on to a bit more about what that is. We have a small amount of volume into contract manufacturing where we manufacture for brands. You'll see on the bottom right, we are a pan-European business. Everyone thinks we're just a UK company. We're not. UK is our third biggest market. Germany is our number one market, nearly a quarter of the group, and France, UK, Italy, Spain, the main countries.

[Chris Smith, CEO & Director at McBride plc]

We are doing, as you'll hear in the results, just under £1 billion of sales in the year to June 2025. Next slide, please, Hannah. It's really important for people to understand, I think, in our business model, private label, or some people call it white label, is at our core. That is the roots of the business and the absolute core mission of the company. You can see our purpose statement here, everyday value cleaning products, so every home can be clean and hygienic. We are your everyday supplier of everyday products that you see in the supermarket aisle. I'll come on to the product ranges in a moment. I just would like to point you, if you get the chance and you're on LinkedIn, join us and look us on LinkedIn.

[Chris Smith, CEO & Director at McBride plc]

We've just been doing a series of interesting articles that paint the backdrop to what is private label, what does fast followership mean, what does McBride offer to the market. There are some really good posts that have been coming out in the last three or four weeks. I would point you to look at those if you get the chance. It gives you some nice background around the company as well. Next slide, please, Hannah. The products that we manufacture are summarized here. In reality, the main three thrusts for the group are laundry products, dishwashing products, and surface cleaners or household cleaners. We also have some air care products from our aerosols business.

[Chris Smith, CEO & Director at McBride plc]

In laundry, it's everything you would imagine if you stood in the aisle in Tesco, from laundry powder to laundry liquid to laundry capsules, a fabric conditioner, stain removers, all those sorts of things that you would see. Dish the same, so tablets for automatic dishwashing machines, dishwash powders, and of course, also hand dishwash, very liquid equivalents. Cleaners is everything you imagine with a spray onto a surface table, cleaning surface, cleaning antibacterial sprays, toilet cleaners, bleach, all those sorts of products. Absolutely pretty much everything you will see in the household aisle of a retail partner. Next slide, please. We run our business across five divisions, product-driven. You can see the five divisions here. Liquids, which is anything that you pour basically out of a bottle, out of a carton, out of a pouch. We do what we call unit dosing.

[Chris Smith, CEO & Director at McBride plc]

Those are your dishwash tablets, your laundry pods, and increasingly these soft pods that you have in dishwash. Powders is what it says on the tin. It's absolutely the standard. The familiar thing that most people remember in laundry powders and dishwash powders. Then we have an aerosols business, and we have a kind of incubator fledgling business in Asia doing predominantly actually personal care and household products. Next slide. The industry in which you will know and you will see if you stand in the aisle of a supermarket, as you know, is all about ultimately innovation in the products that you're being offered as a consumer. The real focus in innovation nowadays is all around packaging and compaction, better formulation to reduce carbon footprint. McBride is at the forefront of this in the private label space.

[Chris Smith, CEO & Director at McBride plc]

Whether it's recycled plastic, we've been the first to market, for example, with laundry liquid in a, well, it looks like an orange juice carton. You can buy that in Sainsbury's, for example. We're the first to market with a paper bag rather than a plastic bag for laundry powders. We're the first as well to the market with a cardboard box rather than a plastic tub, for example, for laundry capsules. The world is moving fast. The retailers are very demanding in this space, and it's a key aspect of our business, as you might imagine. Finally, on the sort of intro deck, why is McBride PLC successful and the number one in this space? We pride ourselves on being the most competitive, the most reliable, and the most innovative supplier to the trade across all the markets in which we operate.

[Chris Smith, CEO & Director at McBride plc]

We are hugely customer and market-oriented and focused. We bring significant scale. That brings fantastic distribution networks. It brings buying scale for things like raw materials and also, of course, things like innovation. We are distributed in our asset base. Transportation is expensive to move bottles of washing up liquid around, so we have a distributed asset base, pretty unique in the industry. We pride ourselves on expertise and being absolute leaders in the specialisms that are needed for these categories. With our new strategy that's been in place now for three to four years, absolutely focused and disciplined on what we're trying to achieve in our strategic outlook. That's a very, very rapid rattle through McBride PLC at a glance. Hannah, we now got a corporate video. If you would, you suggest to play that.

[Chris Smith, CEO & Director at McBride plc]

This is available on our website, the corporate video, by the way, in the Who We Are section. If you want to watch it again, you can at your leisure. Over to that.

Mein Name ist Sandra Atzendorf. Ich wohne mit meinen beiden Kindern und meinem Mann. Meine Kinder werden verdammt dreckig beim Fußballspielen, beim im Garten toben, alles, was Kinder so tagtäglich treiben. Die Haushaltskosten, die haben sich bei uns verdoppelt, und das ist schon enorm. In erster Linie haben wir auf die Eigenmarken umzusteigen, ganz einfach, weil die Preise enorm gestiegen sind.

McBride is proud to be the number one supplier of private label household cleaning products across Europe, partnering with virtually all the leading supermarket chains, proudly bearing their name in pursuit of giving their customers the option of affordable, effective hygiene for their families and their homes. The people in McBride are what make the difference to our company. Whether they're in the laboratories, in the factories, or on the road selling, our teams remain committed and passionate about the business.

My passion is the innovation. My challenge is to make everyday cleaning products more performant, more sustainable, and affordable for the consumer.

We've committed to science-based targets for our operations and our supply chain, with the ambition of mobilizing our entire organization to reduce our corporate carbon footprint in line with climate science.

Actually, it's really rewarding for me and my team to know that our daily work is so positively impacting the society. We are there to solve problems and to have a little bit of fun.

Grâce à notre présence paneuropéenne, nous sommes en mesure de collecter et de fournir des informations précieuses sur les tendances de marché, les attentes des consommateurs, les attentes des shoppers, afin de répondre au mieux aux besoins de nos clients.

Onze fabrieken moeten heel efficiënt produceren. We blijven continu investeren in onze fabrieken, maar daarnaast werken we ook continu aan verbeteringen, aan efficiëntieverbeteringen en productiviteitsverbeteringen.

In onze fabriek zijn we samen met onze medewerkers continu op zoek naar manieren om de beste kwaliteit prijsverhouding te blijven garanderen. Een unieke aanpak waar eigenaarschap en gedrevenheid centraal staan. In onze fabriek in Ieper produceren we ongeveer 1 million flessen per dag.

Als je kijkt naar de productie van Unidog producten, omdat ze relatief klein zijn, is de snelheid van productie heel erg hoog. Als je dan grote hoeveelheden product met de juiste kwaliteit uit een lijn ziet komen, geeft dat een groot gevoel dat je zo'n klein product uiteindelijk omzet in pallets vol, vrachtwagens vol, en die uiteindelijk bij de klant op het schap komen. Dat is mooi om te zien. Heel leuk.

My vision is for customer service and logistics to become an indirect driver for growth for McBride. The move from Köppen to Gera moved us 500 kilometers to the east, which moved us closer to our liquids factory in Poland, but also closer to the center of gravity for two of our biggest customers in Germany.

Het heeft ook voordelen dat je op verschillende locaties zit, want de transportkosten spelen een rol. Dus wij hebben in liquids bijna in ieder groot land een fabriek, waardoor we veel sneller op die vraag van die klant kunnen reageren.

McBride is a pan-European end-to-end business. Our 3,500 colleagues are engaged in multiple activities. We produce nearly 1 billion consumer items across our 13 factories, and we ship 1.3 million pallets through our 12 logistics centers to over 200 customers from Bordeaux to Brisbane, Malmö to Malaga. Increasingly, we see shoppers making the choice to private label because they know at half the price of the branded equivalent, with no compromise on quality and performance, they're getting value. As a dad, I know that cleaning products are an essential part of daily life. You need things you can rely on if they come home dirty, wet from sports or from school. You know you can overnight wash and get your laundry sorted with products that you know will always work. That makes me very proud that I know every product we make in this business will do that.

to the well-being of the children, the cleanliness of the household, that's where we don't want to make any compromises. No, I wouldn't go back, because the private label products are just as good.

[Chris Smith, CEO & Director at McBride plc]

Great. Thank you, Hannah, for sharing that. We'll now move on to the slide deck that we presented yesterday as part of our results announcement. It's really, you know, it was an absolute pleasure and I'm super proud as part of the leadership team to be able to present the numbers that we did yesterday. Continued proof, really, of our rebased and much improved business. I'd like to think that another set of strong performance results, as we're sharing with you today, will begin to turn heads as we cement our performance at these new levels as the leading business in its sector in Europe. As you'll hear through this presentation, the group's confidence of its position and progress towards its strategic goals. This confidence is behind the reinstatement of our annual dividend, all of which will help support more investor interest in the group and the potential value opportunity.

[Chris Smith, CEO & Director at McBride plc]

As you will hear shortly, McBride PLC is also a much stronger all-round business. Our platform is much improved. Yes, we've turned around the financials. We've doubled our EBITDA returns from historic levels, and we've normalized our balance sheets in the past few years. Equally worthy of note is the extent to which we've improved many of what you might consider to be background features and aspects of the group's performance. Therefore, our credibility with customers, suppliers, colleagues, banking partners, and other stakeholders is much improved. These core capabilities have permitted McBride PLC to continue to grow in a competitive and price-sensitive market while sustaining these high levels of profit margin. We've seen a lot of doubt in recent years that we can maintain these profit levels.

[Chris Smith, CEO & Director at McBride plc]

I'm delighted to say this is our fifth consecutive reporting period at these new profit levels, with our outlook consistent to retain at this current level. Our heightened profitability has translated well into strong cash flows. From cash generation, our net debt has fallen again. It's now close to £100 million, and our debt cover level is well ahead of our 1.5 times target. We mentioned at our Capital Markets Day 18 months ago that we had a series of options and ideas to support further growth and expansion of the group as part of its strategic growth agenda to further its leadership in the industry. Our balance sheet is now able to permit the group to be considering these options behind what we call our core plus and our buy and build ambitions.

[Chris Smith, CEO & Director at McBride plc]

Finally, this financial position overall and our confidence for the future has permitted the board to announce the reinstatement of annual dividends, with its first dividend for over five years now recommended at £0.03. Next slide, please. Thank you. At our Capital Markets Day March 2024, we outlined our strategy direction and our midterm financial targets. It is really pleasing to be able to report good progress towards these targets as outlined on this page. In revenue terms, our growth ambition of 2% per year is a volume target. Whilst revenue growth in the last 12 months in GBP terms was up to some 1%, in volume terms, our growth was at 4.3%, demonstrating continued progress with our growth task. Our profitability held at 9.3% in terms of EBITDA.

[Chris Smith, CEO & Director at McBride plc]

Good profit growth in our powders, unit dose, and aerosols businesses was offset with slightly weaker margins in our liquids business, which is off just under 1%. As I said, our cash performance was very pleasing. Despite increased CapEx, net debt fell again, and debt cover is now at 1.2 times, beating our target at 1.5 times. Part of the net debt improvement was the result of good working capital management, which offset higher capital additions, with the result that ROCE held at levels reported last year at 33% and significantly ahead of our 25% target. I will update you shortly on our transformation program, but this remains central to our strategy delivery and is now delivering net benefits and remains on track to hit the £50 million cumulative net benefit over five years.

[Chris Smith, CEO & Director at McBride plc]

The leadership and the board of McBride PLC are focused, are laser focused, shall I say, on delivering the strategic ambitions for McBride PLC and its stakeholders. We remain confident we have the right team and the right direction to deliver on these targets over the midterm. Next slide. Whilst most of the headliners the investor audience will want to hear will center around our improving financial metrics, I'm also super proud of the excellent performance across a range of other crucial areas, but point to McBride PLC being a stronger overall business now and for the future. Service levels to customers, we call it CSL, as a key hygiene factor for any supplier into retail. Our work in our transformation program on service excellence and strong focus across the business has seen the best service levels in the group for over six years.

[Chris Smith, CEO & Director at McBride plc]

This positions McBride really well for any new business opportunities, margin management conversations, but also keeps our logistics and internal servicing costs to the optimum levels. Ensuring we're as efficient as possible in our manufacturing has stepped forward again this year with focused continuous improvements driving machine efficiency in the factories, yielding on average something like a 2% improvement in operating effectiveness. Finally, on this slide, I'm not going to go through all of these. I'm just going to talk about our sustainability ambition. We have continued to make real progress with our carbon footprint reduction ambitions, real reduction in absolute carbon levels in the last 12 months despite volume growth, and actually reporting an intent, what we call an intensity level reduction of -8%. We are on track to deliver our carbon commitments. Next page, please.

[Chris Smith, CEO & Director at McBride plc]

A key feature of our reset business and our strategy is to be far more informed and better aware of what is happening in the markets as a whole. We have spent a significant amount of time developing our data analytics to support our understanding of how we're performing relative to the market and how the market itself is performing. We buy panel data for the five countries that the flags are shown on this slide, and we can track quarter by quarter a rolling 12-month total market position of both branded and private label products in the categories that we supply. The graph on the left shows the total market volumes over time, each bar being in the next quarter on and the last data to June 2025. The dark green bars represent the branded volume and the light green bars represent the private label volume.

[Chris Smith, CEO & Director at McBride plc]

The overall market moved up a little bit, 1% in total, but as you can see with the top line on the chart on the right, the private label growth continues to outperform the branded volume growth. Private label share has grown to 35.5%, up from around 30% three to five years ago. That would appear that line on the chart, which is that private label share, has steadied and is holding now at these new high levels. Evidently, if we look at other sectors like pet care, pet food, baby diapers, ice cream, private label share, when it makes such a significant step change, stays at these new levels. We expect that to continue in the coming year. In the branded space in this last 12 months, we have seen a longer period of promotional activity from the branders, typically in the springtime.

[Chris Smith, CEO & Director at McBride plc]

We haven't seen that for a few years now. There was some impact into our volumes and the market more generally during the end of what is our quarter three, so February, March, and a bit into April. Since then, we have seen generally private label demand return to normal levels, solid and robust. In terms of categories, quite some differences in category penetration for private label. A key focus and strategic direction for us is laundry. Laundry is typically the highest value, highest margin part of the market. It's the least penetrated for private label, typically just under 30% for laundry, where we compare that to dishwash, where penetration is 44%. Overall, we grew our volumes in private label just under 2%, as was evident in the market as a whole.

[Chris Smith, CEO & Director at McBride plc]

We did particularly well in dishwash, where we outperformed the market heavily, and in laundry liquid, which is a key priority and focused strategic area for us. We grew that business 7% against the market, grew 2.8%. Trends in the market still favoring private label. We believe that they will hold at this level, and our growth in the future will be coming from contract wins and growing our share in the existing customer base. Next slide, please. Just very quickly on our divisions, for your information, all these divisions have their own management teams. We have a series of shared resources like purchasing or transportation, central finance, and IT, for example. All other functions reside and are accountable within profit and loss accounts for each of these five divisions. Liquids is our biggest division, over 57% of the group.

[Chris Smith, CEO & Director at McBride plc]

We saw a good performance from the business this year, growing top line, moving up in contract manufacturing, and we onboarded a significant new contract manufacturing contract in France. We've progressed strongly with our operational excellence agenda, driving lean approaches in manufacturing. We continue to invest in automation and reduction of headcount through robotics and end-of-line automation. That business is cost-oriented, by the way. You'll see each of these divisions has a strategic focus. Liquids is typically the most competitive environment. It's the lowest barriers to entry, cost leadership essential as a strategic focus for that division. Our unit dosing business is much more about product leadership. This is a fashion thing. You'll see frequent changes to formats. These are typically high priced on shelf. We work hard to lead in this space by driving new innovation, new formats all the time.

[Chris Smith, CEO & Director at McBride plc]

Two new dishwash formats introduced in the last year, and we are now bringing to market the first soft dishwash fusion product, we call it, into market right now. Actually, the performance improvement for unit dosing last year, when you see the profit numbers, was all about its operational performance. These are very difficult products to manufacture, very fiddly, quite intricate machinery. We had a fantastic step up in output, waste reduction levels, and labor efficiency through the factories. Good to see the progress that business, our most profitable business, has performed this last year. Very quickly on the others, laundry powders and dishwash powders is a declining market. Whilst it needs to be cost leadership, it's absolutely about specialism and expertise. A lot of work for sustainability on compacted products.

[Chris Smith, CEO & Director at McBride plc]

The days of 10 kilo boxes of laundry powder, you're now buying 1.5 kilo bags of laundry powder to do the same number of washes. That's very good for the carbon emissions and good for transport and everything else. We've had a great job there, even though the market has declined slightly, strong delivery and margin expansion through operational performance improvements. I'll quickly touch on aerosols. This business was loss-making when we started the journey of divisionalizing this business. This last year, it's grown 21%. It's absolutely leading in its space. We are very positive about the outlook for our aerosols business. Next slide, please. I'll just touch down on our transformation program. We launched this transformation program. We ran a series of what I call excellence projects about two years ago. The outcome was to obviously try to drive value and drive benefits.

[Chris Smith, CEO & Director at McBride plc]

We targeted £50 million across the five years from 2023 to 2028. They're all around improving the platform that McBride PLC has got. The backbone to this project is our SAP upgrade. We are currently an SAP customer. We have SAP across our division, but it's a 26-year-old SAP, and we are now migrating to the latest generation. This is a multi-year project. It's the backbone, really, of our excellence agenda, standardizing processes, absolutely harmonizing the way we work across every location. Obviously, they're driving efficiencies, much more analytics, digital interfaces, AI experiences as well. We are well on track. We have our first go live in the first of November. We're doing it on a very limited site-by-site basis, so we're not exposing the whole business to this at one go. Our first one is coming up in November.

[Chris Smith, CEO & Director at McBride plc]

We're very positive and in a good place on the rollout of that project. Our commercial and service excellence programs are actually now in the phase of closing out the project workstreams and readying for handing back to the business as business as usual. We have made great progress with both these initiatives. The time is right now to bed in the change they brought and continue to deliver on the benefits each are already showing. Our service performance statistics show the progress. We're up to 94%. That's the best in six years. Our improved pricing and margin management, evidence of the commercial excellence program, end of that coming through in our results. As we go forward, we will see these full-year benefits roll continuously into our results going forward. The expected benefits from SAP and our productivity program coming a little later in the five years.

[Chris Smith, CEO & Director at McBride plc]

We're also driving overhead efficiencies out. We removed 60 people at the end of the last financial year. People were underperforming. We have a rigorous assessment of individuals now. We've upped our game as part of that platform on our HR disciplines and HR processes. We've cut costs and we're driving overheads out by my Germany drive performance across all aspects of the company. That's my rapid overall business progress update. Hopefully, you've heard about not just about the financials, but also the strong all-round business that McBride PLC now is and how we are set up for continued progress towards our midterm goals. I'm going to hand it over to Mark now to cover off some of the financials.

[Mark Strickland, CFO & Director at McBride plc]

Thank you, Chris. Good afternoon, everyone. I'm pleased to have reported an excellent set of results for the financial year ending 30th of June 2025.

[Mark Strickland, CFO & Director at McBride plc]

As you'll see, business has further strengthened its balance sheet, increased its liquidity, and through the reinstatement of the accordion, further increased its optionality for future investment and capital allocation. As a result, I continue to have huge optimism for what the business can deliver for its shareholders into the future. Looking at the 2025 financial year in a little bit more detail, whilst group revenues were down £8.3 million, 1.9% on an actual basis, on a constant currency basis, they actually rose by 0.7% or £6.5 million. Contract manufacturing especially has helped this constant currency growth. As a business, we continue to look closely at forward-looking raw material and packaging trends, adjusting sales margins accordingly. This, combined with close operational and overhead cost control, means that at £66.1 million, our adjusted operating profit has been maintained at similar levels to last year.

[Mark Strickland, CFO & Director at McBride plc]

Over the last three years, we have progressively strengthened our balance sheet through cash generation and debt reduction. For the 2025 financial year, our free cash flow was £93.9 million, and our net debt further reduced, ending the year at £105.2 million. This gives the business a great platform for further investments in growth. Next slide, please. This slide looks at the group and divisional performance on both an actual and a constant currency basis. If we look at the left-hand side at the actual revenue figure, there were two notable impacts at play. Firstly, volume growth of £39.5 million or 4.3%. This arose from new contract manufacturing volumes, continued private label volume growth, and a significant growth in our aerosols business. The second impact was the price and mix effect of negative £33 million.

[Mark Strickland, CFO & Director at McBride plc]

This is because there were more sales of lower value products in financial year 2025 versus financial year 2024. It should be noted, however, that though the selling price may be lower, the profitability is often similar to other products as these are also lower cost format products. I've included the tables on the right-hand side of this slide because of the significant impact of currency during the 2025 financial year. I won't go through the detail, but this clearly illustrates the point that whilst an actual currency boasts revenue and operating profit reduced slightly, when looked at on a constant currency basis, in fact, both revenue and operating profit grew. Next slide, please. In the interest of time and allowing questions, I'm actually going to skip over the divisional detail and move on through the divisional slides to slide 18.

[Mark Strickland, CFO & Director at McBride plc]

If you look at the divisional slides in detail, they just give a little bit more about each element of our business. What I wanted to do is spend a little time on looking at costs. As you can see, input costs were broadly flat. Looking at the left-hand chart, costs broadly flat. As you can also see, they remain significantly higher than back in 2021. Inflation is still prevalent, and some costs are still rising, albeit at slower rates than over the last few years. This is why McBride's continuing focus on margin management has been key and will remain key to the delivery of another good set of results and similar results into the future. This consistency of performance means that McBride, as a group, remains very well placed to sustain and grow profits into future years.

[Mark Strickland, CFO & Director at McBride plc]

In terms of overheads, as you would expect, we continue our focus on cost optimization. I deliberately talk of cost optimization, not cost reduction, as we will continue to spend in areas where we believe the returns and benefits of any expenditure exceed the actual cost increase. As with most businesses, technology remains a key focus, and indeed, McBride has embraced new technology, believing that this will be a key positive differentiator going forward. Just some examples, we will shortly be going live with Wave One of S/4HANA, as Chris has said. We continue to invest into and benefit from our data analytics function. Again, a real-life example of this capability is some of the market analysis information that you saw in Chris's earlier section. We're also actively developing appropriate uses for AI across the business.

[Mark Strickland, CFO & Director at McBride plc]

Lastly, it would be amiss of me not to talk about distribution costs, which actually rose to 9.2% of revenue from 8.7% of revenue. This was actually as a result of the higher volumes we put through the business at the lower selling prices. You had higher volume whilst revenue didn't necessarily increase. Next slide, please, Hannah. Looking at pensions, year on year, the IAS 19 pension deficit decreased to £24.9 million from £29.4 million due to the deficit reduction contributions paid by the group, a lower value of liabilities, and lower than expected inflation. The deficit is comprised of a UK defined benefit deficit of £23 million and a post-employment benefit obligation outside of the UK of £1.9 million. For information, the UK scheme is closed to new members and future accrual.

[Mark Strickland, CFO & Director at McBride plc]

Within the UK scheme, contributions for the financial year 2025 totaled £7 million, being made up of £5.3 million of deficit reduction contributions and a one-off payment of £1.7 million to remove the pension trustees' dividend matching mechanism, which was put in place a couple of years ago. That £1.7 million was already paid back, as without removing it, the trustees could have claimed that they could get £5.3 million, which is the cost of the dividend. For the price of £1.7 million, we've avoided a £5.3 million cost. The 31st of March 2024 triennial new valuation was agreed with the trustees during the year. As part of that agreement, McBride PLC has agreed future pension deficit reduction contributions of £5.7 million to the end of FY2028, whereupon they revert back to the previous profit-related mechanism.

[Mark Strickland, CFO & Director at McBride plc]

Turning to CapEx, at £30.4 million, capital expenditure levels were above historic norms as the business invested in both its new SAP S/4HANA system and for future operational growth. It is expected that in FY2026, that will be the sort of level of expenditure, but thereafter, it will drop back down to around £22 million to £25 million as the SAP project comes to completion. Finally, onto net debt. As indicated at the start of my presentation, the business continues to generate strong cash flows and strong cash conversion, resulting in net debt falling to £105.2 million. Additionally, the business has strong core liquidity with around £141 million of headroom within its core facilities and an additional unutilized €75 million accordion facility. It is as well placed as it could be for both internal and external future expansion and investment. Next slide, please, Hannah.

[Mark Strickland, CFO & Director at McBride plc]

We flagged up in January that the board intended to reinstate annual dividends, and I am pleased to say that the board is recommending a £0.03 per share dividend for the 2025 financial year just ended. Hopefully, going forward, we may become increasingly attractive as a mixed proposition share comprising capital appreciation combined with an income. As I said at the beginning of my presentation, I'm hugely optimistic for the future of the business. In the Capital Markets Day in March 2024, we set the business on challenging midterm targets. As you have seen today, we are either already delivering on many of them or have made significant progress to achieving the others. My personal belief is that this set of results provides a further proof point that the business is definitely on the right track. Thank you, and I'll pass back to Chris.

[Chris Smith, CEO & Director at McBride plc]

Thank you, Mark.

[Chris Smith, CEO & Director at McBride plc]

Just to wrap up in terms of an outlook, we are closer to the end of our first quarter, and at this stage, we have seen solid starts of the year. Our volumes are absolutely in line with where we expected them to be. We are seeing a good success rate in recent tenders, signaling further growth coming through in our next second half of our next financial year. We are seeing great progress with our customer partnerships. That's evident in our win rates and that robust pipeline looking promising. The group will continue its mission on optimizing operational delivery and efficiencies, both in our day-to-day work, but also from the work from the transformation team, the transformation program, all supporting that midterm ambition of 10% EBITDA.

[Chris Smith, CEO & Director at McBride plc]

Finally, with a strong balance sheet and financial flexibility now, the leadership team are looking at options for investment to support the midterm step up in the group's scale and value creation opportunity for the benefit of all current and future shareholders. That's it on the presentation, Hannah. We're delighted to be able to take questions.

[Hannah Scott, Director - UK at Instinctif Partners]

Super. We have a number. Right, here we go. Cost pressures and margins. Are you able to add any detail as to how much of a threat to our operating margin are the cost outs demanded by customers?

[Chris Smith, CEO & Director at McBride plc]

Look, it is always a feature of every conversation with any retailer, right? Cost and price of product to retailers. It's not universal. We see very different conversations with different retailers, so please don't think every element of the market across all of Europe is identical. We are part of our skill set, part of our capability is that ability to manipulate and manage product engineering to the benefit of both customers and ourselves. Unlike some other industries, like food, for example, if you could pick up a bottle of Tesco washing up liquid and a bottle of Sainsbury's and a bottle of Asda, and they all look the same, they're all the same size bottle and the same color, they are typically entirely chemically different. Every product is typically unique. We have that ability to flex formulations.

[Chris Smith, CEO & Director at McBride plc]

It may affect performance, it may affect viscosity, it may have less perfume, more perfume. There are always ways to manage that. It's an active part of the way we operate with our customers, and they all go through phases of wanting quality, and they'll go through phases of wanting cost. That skill set, and Mark talked about it earlier, the focus on margin management to make sure that, yes, we can move prices and costs, but we're managing our margins and maintaining our margin. There's been a lot of talk over the years about the ability of the power of the retailers into the supply side. In the crisis that we saw with the hyperinflation years ago now, we recognize the import, we saw very clearly how important we are to our customers. There isn't anyone, Tesco honestly probably couldn't go anywhere else to do exactly everything we're doing.

[Chris Smith, CEO & Director at McBride plc]

You do have leverage. We do have arrangements with customers now for quarterly pricing reviews. It's not programmed. It's the right of both sides of the contract to ask the questions and challenge. It protects our margins much better than before.

[Hannah Scott, Director - UK at Instinctif Partners]

Is the negative £33 million price and mix effect on revenue entirely the result of the cost outs demanded?

[Chris Smith, CEO & Director at McBride plc]

No, the mix side is not. Mixes that we do, we've like part most of the mix effect is actually the impact of the big contract manufacturing arrangement that we have with one of the world's biggest brands, where we now 100% manufacture their bleach in the French market. Bleach is a low-priced commodity and product, but it's a stepping stone for us into a major relationship with a big brand. There is a bit of price give here and there, but we've, you know, as you can see in the numbers, we've held our margins despite that.

[Mark Strickland, CFO & Director at McBride plc]

Just.

[Mark Strickland, CFO & Director at McBride plc]

If a retailer says, "Look, we need you to get to a certain price point for a product," we may not supply the same product as they were getting before. We'll say, "Look, if you want us to meet a price point, then we're going to re-engineer that product because we reserve the right to keep our margins." It isn't just a like-for-like product and a reduction in the price. If there is a reduction in the price point, there is probably a reduction in the cost we put into that product. Therefore, we maintain our margins.

[Hannah Scott, Director - UK at Instinctif Partners]

Okay, let's move on to cash flow and capital allocation. You did a great job of bringing debt down. Do you foresee a decline of similar magnitude in the next period, given consensus forecasts are broadly flat, or do you have other spending plans for the free cash flow?

[Mark Strickland, CFO & Director at McBride plc]

That's a really good question, and it's the right question. I think we focused on getting our balance sheet into a really good place, and I think really good place. That has now really given us optionality. We've obviously decided as a first step to pay dividends, but our capital allocation process is quite rigorous. People have talked about share buy bonus, about, do you want a progressive dividend? Do you want to do M&A? We have a rigorous process. We have plenty of ideas as to what we might do, but we also have shareholder value accretion in our minds. At any point in time, we will take decisions based on what is available to us at the time. If we carried on and did nothing, we would reduce debt further, but I'm not convinced that reducing debt further is the best use of our cash.

[Mark Strickland, CFO & Director at McBride plc]

There may be better uses. That just depends how the year progresses and how opportunities come our way or don't come our way. It's a really good question.

[Hannah Scott, Director - UK at Instinctif Partners]

Do you have a maintenance CapEx backlog, or are you now able to fund growth CapEx?

[Mark Strickland, CFO & Director at McBride plc]

I don't think we've ever really had a maintenance CapEx backlog. I think even when we constrain cash, we kept maintaining our equipment. It's always interesting whether CapEx is maintenance or growth, because as your machines become older and you replace them, is that in fact maintenance CapEx, or when you replace them, you tend to replace them with a machine that will do things quicker or cheaper, you know, higher volumes, and that actually gives you growth and more ability to grow volume within your businesses. Now, is that maintenance CapEx, or is that growth CapEx? I think it's a little bit of both. I don't believe our facilities are particularly starved of CapEx. I think they are appropriately invested. We also have quite a challenging approval system to make sure that we do invest in the right things. It's not free money.

[Chris Smith, CEO & Director at McBride plc]

I think just to add to that, we like to have a balance in the tap, and it's not all about growth, the stuff beyond pure maintenance. There are some great opportunities for efficiencies. We talked earlier about automation, end-of-line, removing labor from our cost structure. Cobots and robots don't ask for pay rises, right? They don't do industrial action or have accidents. We see plenty of options and ideas coming from the business. There are some great sources of high quality, good value capital outside of the usual channels, which we're exploring to drive real value quickly. We've done a few this last year. We'll do more. There's absolutely opportunity to drive margin improvement from CapEx automation, as well as obviously from growth, which we will always continue to support.

[Hannah Scott, Director - UK at Instinctif Partners]

Okay, just another quick one for you, probably, Mark. Can you tell us what estimate of WAC you're using to make decisions about what to do with free cash flows?

[Mark Strickland, CFO & Director at McBride plc]

I actually use a different methodology. I'm from a private equity background, so I tend to work on payback. My initial starting point is to pay back on stuff. Having said that, for the right things, we'll do a long payback. For health and safety, you've just got to do health and safety. I don't work on a WACC. I work on return on capital. We've said it's over 25%, but I also work on how quickly can we spin that cash. Can you get a payback quickly so you're spinning the cash and utilizing it? Very sort of private equity sort of approach to it.

[Hannah Scott, Director - UK at Instinctif Partners]

Okay, thanks. This individual's obviously seen the chaos that's been caused at the likes of M&S with their systems being hacked. Are you confident that won't happen to yourselves? If so, why is that the case?

[Mark Strickland, CFO & Director at McBride plc]

We concentrated on the shell. We've put a lot of money into the shell to prevent people getting into our systems. However, we switched from a prevention of attack to eventually somebody will get through. It's not if, it's when. If you change your attitude to, okay, somebody eventually will get lucky and get in, because we've got to be lucky every minute, every second of every day to prevent them getting in. We spend a lot of money now on the inside of the shell as to how quickly we would detect somebody on the inside and also how we would shut segments of the systems down and how quickly we could get back up. We're as confident as we can be. Until it's tested in anger, you're never 100% sure, but we have an awful lot of top experts' advice. We do have penetration testing.

[Mark Strickland, CFO & Director at McBride plc]

We have crisis management. We have simulations. Can I guarantee? I don't think anybody can guarantee, but I think we're in a reasonable place.

[Chris Smith, CEO & Director at McBride plc]

Compulsory training is the other thing. The biggest risk is social engineering, isn't it? Making sure all of our teams, all our interfaces with systems are up to date on their training is a key part of work we've been doing as well.

[Hannah Scott, Director - UK at Instinctif Partners]

Two questions on buybacks. Are you considering them? If not, why not?

[Mark Strickland, CFO & Director at McBride plc]

It's part of the capital allocation consideration. At the moment, if you look at our share price, you would argue it's relatively good value, and you could deliver value to shareholders by buyback. If you're not careful, that just concentrates the shareholder base even more. We did one about four years ago, and it didn't desperately move the share price. We also have a number of other ideas as to what we could do with it. It's not out of the question. At this moment, we are just concentrated on paying the dividend. As I say, the balance sheet strength, you're absolutely right, gives us optionality, which is a nice place to be.

[Hannah Scott, Director - UK at Instinctif Partners]

You raise it there, the share price question here around the frustrations that a lot of private investors feel at the current valuation put on the business. You know, why do you think you are so out of kilter from your peers?

[Chris Smith, CEO & Director at McBride plc]

It is immensely frustrating. I mean, you know, we recognize that for all involved. I think the message we get, the story we get is, look, you know, concerns about 2022 happening again and concerns around, which, you know, I know we shouldn't say the word unprecedented. No one likes that word. I mean, we've never ever seen anything like that in my 11 years and in any of the history of the company before. It was all an outcome really of the consequences of supply chain post-COVID being chaotic and the inability to get chemicals and prices going up crazily. The other fear people have is that sort of, you know, is this going to go back to being a 3.5% to 4% business like it was for the 10 years probably running up to the COVID time.

[Chris Smith, CEO & Director at McBride plc]

You know, we're super confident this business is not a 3% to 4% business. This is a 7% to 8% and an 8% to 10% business in EBITDA terms. You know, we fundamentally believe, you know, the restructuring we've done, the way we've driven the organization design up, focus in the right markets. We have, in the five years up to COVID, this business declined its volumes every single year. In the five years since, we've grown them every single year. That's a testament to the way we now approach the customer, the way we operate with the customer. We're firmly of the view that higher levels, sustainability levels of profits are there. The message is you've got to keep doing it to prove it. This is our second full year.

[Chris Smith, CEO & Director at McBride plc]

It's two and a half years because the year before that was, we were coming out of the challenge, and the second half was at these sorts of levels. We have got huge amounts of headroom, you know, and in the last crisis, you know, we entered that crisis, which is unprecedented. I mean, we had £260 million, £270 million of inflation on input costs in a nine-month period on a business that was making £30 million of EBITDA. You can imagine how difficult that is to sort out, but we did. We've come through it. We've completely changed the relationships we have with our customers. You know, we can never predict whether there's going to be another macro crisis like that. This business is an entirely different shape business and a more resilient business.

[Chris Smith, CEO & Director at McBride plc]

We have got, you know, as Mark showed in the headroom, you can take a shock. We might take a shock for a quarter, but we have arrangements with customers that allow us to go back and challenge on price if that's fairly evident. We spend a lot of time on raw material prediction, with indices. We're using data for analytics. We're using all sorts of statistical processes to try to predict the forward views on ethylene, on natural products like natural alcohol, and these sorts of things. That's a major part of our proposition to customers, giving them that insight early. I think the business is positioned well. It feels like we just need to do more of it to prove to investors that this isn't a 3% to 4% business again. We're sitting here with our targets. We've shown them today.

[Chris Smith, CEO & Director at McBride plc]

Second year in a row, we're looking for the year forward is looking very similar too. We hope to be better. We're a staple product. Everybody needs toilet cleaner. They need to be able to wash their clothes. They need to clean their dishes. In consumer trucks and where they spend their money, we are a staple. We're the biggest in Europe at doing it. That sets us in a good position for the future. We've just got to do more, but valuation will come in time.

[Mark Strickland, CFO & Director at McBride plc]

Can I just add two things to that? I think in general, the small cap market is relatively unloved in the UK. I think there's probably something Chris and myself can do more of. We've tended to be concentrated on institutional investors, and this is our first attempt to reach out to the retail investors. We need to engage, I think, more with the likes of yourselves. We've probably not got our message across into the retail community as well as we could do. This is our first step, and hopefully we can engage more with investors like yourselves.

[Chris Smith, CEO & Director at McBride plc]

One last point. Although we're kind of fast-moving consumer goods in this phase, it is actually slow-moving consumer goods. I have to tell you this. Nothing changes dramatically overnight, other than that crazy raw material situation, which, you know, has never happened before. The business doesn't lap around from this to that over time. It's really steady. We can predict it pretty well going forward. It isn't, although it's FMCG and everyone gets a bit panicky and jazz hands about the space, it is pretty steady. We are a great customer for our raw material suppliers. We're boringly tedious at buying the same amount of hyperchloride or PVC or whatever we might be buying from our suppliers. It is a steady, solid business. It's not going to change overnight.

[Hannah Scott, Director - UK at Instinctif Partners]

Okay, thank you. That's a really good explanation. Let's take a positive note. We've got a couple of questions here on growth. Given impressive service levels, where are the new opportunities? Sort of aligned to that, are you making any progress on discounters? You were a little bit underweighted, shall we say?

[Chris Smith, CEO & Director at McBride plc]

I love your question. Thank you. No, we're a bit positive on the growth agenda. You've seen in the market data that the tailwind the industry's had for the last few years probably has steadied. There are pockets of difference within the overall market, but in general, the tailwind that we've had and the whole industry's had is probably steadied. It's holding at these new levels. Our growth in private label, the retailers, is going to come from market share gains. I said earlier in my speech that we have made great progress in recent tenders. We've done very well with one of them. Our number one customer is one of the worldwide brands, so discounters that you're probably thinking of. It begins with an A and follows along. That is our biggest customer. It's still no more than about 11% of the group. It's multi-country.

[Chris Smith, CEO & Director at McBride plc]

It's not one single contract. We've just won loads more business at them as well. They're a big partner customer for us. I have a normal gain share. That's the plan within our existing customer base. We don't lose customers. You tend to lose SKUs or categories or ranges. We've never been kicked out really of any customer, but things move around a bit within the industry. We're doing well, I think, in the retail, but we will just gain share. We have targeted areas like we talk strongly about laundry. We want to be number one in the top. We're number one in the five countries, the big five countries in Europe. We're number one in three of them, probably four actually, to start to prove that at the moment. We have a gap in a fifth. We've got opportunities to grow there. My other side is contract manufacturing.

[Chris Smith, CEO & Director at McBride plc]

We have a target of 25% of our revenues get to contract manufacturing. Why? Three reasons really. One, it's load balancing. It means we have regular, very reliable volumes and strategic long-term contract deals. It's a platform of volume through your factories, which cover overheads. Secondly, they are priced quarterly, rigorously by the, so it's absolute pass-through, and we will change the prices every month, every quarter, sorry. Thirdly, relationships with the brands are important. We learn a lot from them. We help co-invest. We sort of co-develop sometimes with branders and they bring standards and insights that are helpful to our business model as well. We think there's more opportunity. Reckitt's recently sold part of their household business. We think some of that may be available for contract manufacturing in the future. We would like to think we could participate in that.

[Chris Smith, CEO & Director at McBride plc]

We are seeing increasingly a number of brands for peripheral operations where they don't have scale, for example, looking for outsourced partners. We think we can grow strongly and get that ratio up in our total portfolio. We're still very positive about growth. As someone said, I think of the question, the platform that I talked about earlier around high-quality service, high-quality products, really strong service levels, good innovation, responsible development around sustainability, factories that you can walk around and be super proud of, safe environments. The platform is in good shape and customers like that.

[Hannah Scott, Director - UK at Instinctif Partners]

Great. The £45 million of transformation benefits, how are they going to be distributed between each accounting period? Which KPI should we be looking at to see this effect?

[Mark Strickland, CFO & Director at McBride plc]

Yeah, so it's £50 million cumulative over the five years. I think we'll see another £5 million in the current financial year. The benefit overall would be £10 million, probably £5 million the following year, which would make it £15 million, and then £20 million in the final year. It gradually ramps up. If you add those all up, that gets you to your £50 million. It will come through a number of things. I mean, how do you prove that you've got an extra £0.01 on a bottle of bleach? We use a number of KPIs for your commercial excellence and the benefit we get from that. Some you can directly measure, such as overhead cost or OEE. Others, such as commercial excellence, how have you measured the benefit from that? It's derived from a number of KPIs. It will come through things like margin. It'll come through operating costs. It'll come through overhead.

[Hannah Scott, Director - UK at Instinctif Partners]

What about the costs of the SAP implementation, both capital and operating? What are the expected benefits?

[Mark Strickland, CFO & Director at McBride plc]

That's a really good question. Again, the benefits are in part of the transformation or part of the transformation benefits. The overall project will be around £27 million to £30 million over four or five years. In terms of the benefits, the benefits should max out around £15 million a year.

[Hannah Scott, Director - UK at Instinctif Partners]

Great. Will you allow me one more question? I mean, we're at half past, but we've got a few more. You mentioned record output from factories, but obviously we're seeing increasing costs in the UK from employment and, you know, obviously expensive in the EU as well. How do you allocate new business to factory? Is it purely a geographical consideration?

[Chris Smith, CEO & Director at McBride plc]

Yeah, so we typically, if you look at the product ranges that we, you know, the divisions are product-based. Liquid products typically don't travel very well. I mean, they do travel, but they're expensive. They're typically lower value per unit, and the freight costs are quite high as a percentage of the total cost structure. Which is why our liquids factories are typically distributed around Europe to be more proximate to the end markets. In most cases for a liquids choice, it's obvious which factory it's going to go to. It will be the one in the local area. When it comes to unit dosing and powders, we make those centrally. They do travel well. The price points are higher. It will depend, you know, our Danish plant for dishwashing tablets is eco-certified. If it's eco ranges, they will typically go there.

[Chris Smith, CEO & Director at McBride plc]

Often it's driven by, you know, the sort of format of the product and what the capability of each site is. We do load balance between the unit dosing and powder sites, less so within the liquids. There's a bit of it. For example, the German market is served by both our Polish plant in liquids, but also our Belgian plant. There is a bit of load balancing, optimizing for costs and transport between those. Typically, it's pretty straightforward where we've got the product.

[Hannah Scott, Director - UK at Instinctif Partners]

Right. What are the branded companies doing in terms of promotion? Where are we in that cycle?

[Chris Smith, CEO & Director at McBride plc]

Yeah, if you look at the data, the price point, you know, we look at the data at a macro level across countries and by categories. Pretty much across the board, the gap I mentioned in my original speech is typically branded products are twice the price of a private label. That gap has widened over the last two to three years. It's not necessarily narrowing at all at the moment. There are some exceptions, but broadly speaking, it's not narrowing. The price gap is as big as ever. What we're seeing with the brands, I would say more than ever, is probably more on advertising. This is our perception. More promotional activity through advertising, through store placement, you know, gondola ends. You're going to see cloak car type promotions.

[Chris Smith, CEO & Director at McBride plc]

You will see as well sort of fixture promotion where they'll decorate shelves and there will be banners and arrows pointing at it. A little bit less on the pricing than we thought. I think they're experimenting. It's not, again, it's a very big generalization, please. I may be completely wrong on any particular case, but that would be the general feeling. I think the price points are not coming down on average. We see the gap held. Therefore, almost by definition, it's not price investment that we're seeing in promotion and advertising.

[Hannah Scott, Director - UK at Instinctif Partners]

Thank you. I know you've got to get off to your next meeting. Thank you very much for your time today to our audience for joining us. Apologies if we didn't get through to your question. I will try and send the extra ones over to management and we can come back to you. That leaves me to say we look forward to hearing an update in six months' time.

[Chris Smith, CEO & Director at McBride plc]

Thanks, Hannah. I really appreciate it. Thank you.

Participants

Executives

• Chris Smith, CEO & Director
• Mark Strickland, CFO & Director

Analysts

• Hannah Scott, Director - UK at Instinctif Partners