McBride H1 2026 Earnings Report

McBride EPS Results

• Actual EPS: GBX 10.80
• 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: H1 2026
• Date: 2/24/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, February 26, 2026
• Conference Call Time: 6:00AM ET

With trading roots dating back to 1927, McBride (LON:MCB) boasts a strong heritage. As the leading European manufacturer and supplier of private label and contract manufactured products for the domestic household and professional cleaning and hygiene markets, McBride offers end‑to‑end development and manufacturing capabilities to a wide range of customers in Europe and Asia Pacific.

McBride H1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: McBride reported continued, above‑historic profitability with group revenue of ~£475m and adjusted EBITDA of £41.8m, leaving H1 margins just under 9% and the full year expected to be above 9%.
• Neutral Sentiment: The first SAP S/4HANA UK go‑live in November was declared successful and materially reduces future implementation risk, although it caused a short-term disruption (≈£3m lost sales and ~£1m EBITDA impact) during ramp‑up.
• Positive Sentiment: The board pursued an active capital‑allocation mix, deploying nearly £13m in shareholder returns (dividend and EBT purchases) and launching a £20m share buyback, coinciding with a ~40% rise in market cap since September 2025.
• Positive Sentiment: Operational momentum and a strong pipeline underpin growth prospects: multiple divisional wins are due to start in H2/FY27, aerosols volumes rose ~15% (near 100m cans) and other divisions report steady margins supported by productivity and product engineering.
• Positive Sentiment: Cash generation and balance‑sheet strength provide optionality—H1 free cash flow ~£24m, net debt ~£120.6m with ~£135m headroom and an unused €75m accordion facility to support M&A or capacity investment.

Presentation

[Moderator]

Welcome to the webinar today from McBride, who'll be covering their recently announced interim results and also talking a little bit about the outlook for the business. One or two administrative points first. This presentation is being recorded, so should you miss any of it, you can watch it again. We will be very keen to address questions after the formal presentation, which you can submit via the question button on your screen. The presentation deck that the boys will be talking to is already available on the McBride Investor Relations page as well, along with lots of other useful materials. We're very pleased to be welcoming back CFO Mark Strickland and the CEO, Chris Smith, and I'm now going to pass over to you, Chris, if you can start the presentation.

[Chris Smith, CEO at McBride]

Thanks, Andy. Good morning to everyone, and welcome to our Interim Results Deck and Presentation for the six months to the 31st of December, 2025. We'll cover today, on the next slide, please, Andy, I will cover off headlines and an update on our business progress, before I hand over to Mark, who will take you through a more detailed look at some of the financials, and then I'll come back to myself for the outlook, and then into questions, as Andy said. Before I step through the various slides, I'd just like to comment that there are three key themes that the past six months can really be summarized by. First, continued delivery of our strong financial and operational performance, for the 3rd consecutive year now.

[Chris Smith, CEO at McBride]

Secondly, the passing of a significant milestone in our transformation journey with our first SAP go-live in November. Third, a clear demonstration of a balanced approach to capital allocation to support both short-term shareholder returns and longer-term value creation from business investment. Next slide, please, Andy. This is the sixth set of results, interims and finals, that I've presented, where the group has reported profitability levels at double the historic average, cementing our new financial strength and our optionality to deploy resources to support future growth in line with our ambitions as we set out at our Capital Markets Day about two years ago. The market continues to move in favor of the private label offer we provide, with the latest data showing that private label share has started rising above recent all-time highs, providing a solid platform for McBride to continue to prosper.

[Chris Smith, CEO at McBride]

Our divisional and central teams continue to drive the business forward, tightly aligned to their strategies, supporting our customers as our private label proposition expands to provide value to the retailers and consumers alike. McBride's private label volumes continued to grow this past period, albeit at slightly lower levels than we saw in the past two years, with total sales revenue increasing just under 1% to GBP 475 million. We have secured a robust pipeline of new business wins expected to start during the second half year, leading to positive momentum as we exit financial year 2026. We move into the next financial year of 2027. Our excellence and transformation agenda has continued at pace these past six months. Productivity and other operational improvements, together with tight management of overheads, has seen margins maintained despite competitive pricing pressures and inflationary pressures.

[Chris Smith, CEO at McBride]

EBITDA, EBITA, and PBT all remain consistent with the first half of last year, with EBITDA margins just under 9% for the first half and with the full year expected to be over 9%. I'm really pleased to be able to confirm that our first SAP S/4HANA go-live in the U.K. was successfully completed in the period, after two years of preparation and design. This multi-year program is the platform for future efficiency and operating excellence as we upgrade McBride to the latest best-in-class ERP systems. Our continued strong profit levels and cash generation has supported a balanced approach to capital allocation. In the period, nearly GBP 13 million of shareholder returns were deployed in the form of reinstated dividends, share buyback program, and share purchases to reduce future dilution from employee share awards.

[Chris Smith, CEO at McBride]

Our overall share price rise since September 2025 represents a market cap rise of approximately 40%. Capital expenditure rose to support growth, efficiency, and transformation programs. The group remains active in considering all options for deployment of capital in seeking to grow shareholder value. I'm now gonna move on to provide an update on a series of key business progress topics. At our Capital Markets Day in February 2024, the next slide, please, Andy, we set out a number of key ambitions to measure our progress. At this midpoint of FY 2026, we remain committed to these key targets over the coming years, and our progress since 2024 continues to perform in line. Our volume growth, whilst a little slower these past six months, is comfortably ahead of the target set in 2024 cumulatively.

[Chris Smith, CEO at McBride]

We have an encouraging set of contract wins starting in the second half, which is expected to support better growth rates into FY 2027 and a number of other material growth options in development at this time. Our EBITDA margins are consistently around the 9% level, with another 1% required to reach our 10% ambition, and almost the double, at the double of the level of the historic levels of 5%. We said at the Capital Markets Days in February 2024 that shareholders should expect some minor variability of this ratio, as modest input cost swings will either benefit or impact the group's profitability between periods. Our debt position remains well within our targets. This is after nearly GBP 13 million deployed in the past six months for shareholder returns.

[Chris Smith, CEO at McBride]

Our long-term committed facilities and liquidity availability provides ample scope for further capital deployment in pursuit of our strategic ambition. ROCE remains well above the targets, and our work on excellence and transformation is delivering tangible improvements to support and develop the robust platform the group needs to support long-term success. Moving on to an update on the markets that we supply. We present here the usual panel data, which we receive each quarter. As a reminder, the data is 12 months trailing value and volumes. It covers the top five economies of Europe, all the bricks and mortar retailers, and all the household categories that we supply. We've been tracking this data for over four years now.

[Chris Smith, CEO at McBride]

Having grown substantially between 2022 and 2024, private label market share, in volume terms, as shown by the green line on that chart, stabilized over the last 12-18 months. This latest data insight, however, shows that the overall total market continues to grow a little bit towards the lower end of our 1.1x-2x, sorry, 1%-2% projections, with private label again outperforming brands across all categories, with private label volume share now up to 36.1%, a 0.3% rise compared to the last four quarters. We will wait to see over the next two data drops if this further rise is sustained, but this latest data confirms our view that the more likely direction of travel is for private label to continue to take share and not revert back to pre-2022 levels.

[Chris Smith, CEO at McBride]

Moving on to the divisions, I'll now give a brief update from all the businesses. Next slide, please, Andy. Mark will cover off the financial performance later, but we have seen strong profits progress overall in Unit Dosing and aerosols, but Liquids and Powders were slightly weaker. The Liquids division has had a very busy period and at the same time has had to handle the first go live of the S/4HANA program at the U.K. liquid site. The division saw overall volumes higher, especially from contract manufacturing, which is up 9%, with private label flat. The uncertainty on the rollout of the EU Deforestation Regulation, or EUDR, has seen pressure on certain raw materials, especially for the Liquids business, where palm oil derivatives are actively used.

[Chris Smith, CEO at McBride]

The division did see modest rises in material costs in a market where such small rises are not really able to be passed on. The business, however, was vigilant, of course, in its cost management and in product engineering, and it's managed its margins very well in the period. With future growth anticipated, especially from laundry, the division continued to invest in capacity and new packaging formats to be able to secure new business going forward. In Unit Dosing, we saw a strong operational performance with the benefits of our Flexcellence program, where we now ensure that all our pod formats can be supplied in all the various packaging formats required by customers, yielding output and headcount efficiencies. Overall volumes here were lower year-over-year, but all in contract manufacturing, where a lost contract from last year annualized out at December.

[Chris Smith, CEO at McBride]

Private label volumes were flat, some ins and some outs amongst various customers, and some delays in a few product launches. Strong wins in recent tenders are expected to launch in the second half and early into FY 2027 to provide good growth prospects ahead. The Powders business continues to outperform its strategic targets overall. The market for private label laundry has remained steady, with private label share growing as branded volumes continue to fall. Total volumes for our division in McBride in Powders were broadly flat, with an overall private label slightly weaker than our contract business, which is about 40% of revenues in this division. Like the other divisions, recent wins, expected to launch again in the next six months or so, will provide good growth in future periods.

[Chris Smith, CEO at McBride]

In the meantime, strong operational control and focus has seen margins steady, with some automation capital investment introduced, helping drive margins higher. Our aerosols team have delivered again this year. Volumes were 15% higher and are now close to the 100 million cans target. Very strong growth in Germany was a result of focus over the past few years in this targeted market. A GBP 2.5 million investment in a new production line is mostly complete now, and it's providing the capacity needed to take us past the 100 million cans level. Finally, our Asia business. We had a bit of a mixed year, with weaker-than-expected private label sales to Southeast Asia and a quieter Australia, with a loss of one part of a traded good supply from our European business.

[Chris Smith, CEO at McBride]

Prospects are looking more positive, with our first household wins in Australia for products made in Malaysia expected to launch in the next month or so, and a series of new contract manufacturing opportunities in discussion. Moving on to an update on our transformation program or excellence agenda, as I call it, and this has continued at pace through the period. After over two years of setup and design work from the SAP team, we successfully launched the new global template with the first go live at the start of November in the U.K. business and corporate center. It is pleasing to confirm that the business is operating as usual, with some limited disruption in the early few weeks to our warehouse operations, where whilst the systems were working, we became capacity limited.

[Chris Smith, CEO at McBride]

We did miss a few, some sales in that short period of time, which we estimate to be about GBP 3 million, with a roughly GBP 1 million impact to EBITDA. This challenge was resolved quickly, and the business has seen record output and shipment days since. The focus here has now moved quickly to lessons learned, and we're now deep into planning the wave two rollout of this new global template to ensure we maintain pace towards the efficiencies and benefits that will accrue once we have more locations on this new platform. The other three main programs in the overall plan, service, commercial, and productivity, are all now into business as usual, with the service program completing in September and the Commercial Excellence project completing in December. Both are yielding good results, with improved processes in use across the business and visible KPI improvements. Next slide, please.

[Chris Smith, CEO at McBride]

The past six months has demonstrated the group's flexible approach to capital allocation. With the strength of the group's trading position and its funding capacity, we have deployed nearly GBP 13 million in shareholder returns. At the AGM in December, shareholders approved the board's recommended recommencement of annual dividends, with a resulting payment in November of GBP 5.2 million. In light of a market valuation so far below the board's view on where the group should be valued, the board launched two value initiatives in the autumn. First, GBP 6.4 million was spent on buying shares at an average price of GBP 1.26 through the Employee Benefit Trust, or EBT, in order to fund the EBT with adequate share levels to use for satisfying future incentive awards that are expected to vest in the next two years.

[Chris Smith, CEO at McBride]

These share awards would normally be satisfied by new issue shares, thus diluting the total shares in issue, hence this action, worth approximately 0.7 pence per share of reduced dilution in future EPS calculations. Secondly, the board launched a GBP 20 million share buyback scheme in December. There was only one month of buying until the end of the half year, GBP 1.3 million had been deployed to 31st of December. All of these actions have supported a strong recovery in the share price and our market capitalization, up approximately 40% since final results in September last year. A significant rise, as a reminder, we are still only trading on a 4.9x EV/EBITDA multiple. At this point, I'm now gonna hand over to Mark, who for a more detailed financial review.

[Mark Strickland, CFO at McBride]

Thank you, Chris, and good morning, everyone. The McBride business has delivered another solid set of results. As well as delivering good results, the business has also demonstrated a balanced approach to capital allocation, prioritizing short-term shareholder returns, while at the same time retaining the flexibility to fund our longer-term ambitions. As a result, I continue to have huge optimism for what the business can continue to deliver for its shareholders into the future. Looking at the financial highlights. Group revenues were up GBP 3.8 million, 0.8% on an actual basis, but on a constant currency basis, they were down slightly, 2.1%. While private label and contract manufacturing volumes were both up, McBride branded volumes suffered slightly and declined. Adjusted operating profit was down slightly to GBP 31.5 million.

[Mark Strickland, CFO at McBride]

Without the SAP impact, adjusted operating profit would most likely have been up slightly. In previous years, profit levels have been maintained through good margin management and overheads cost control. Adjusted EBITDA at GBP 41.8 million was on a par with the previous year's first half. Earnings per share were down to 10.8 pence per share, predominantly due to a particularly hard prior year comparator in relation to taxation, which was 25% the last year, first half, versus 30% this year. We expect full year 2026 taxation to be broadly in line with the full year prior year rates. Over the last three years, we have progressively strengthened our balance sheet through cash generation and debt control, this period being no different.

[Mark Strickland, CFO at McBride]

For the first half of the financial year, our free cash flow was a generation of GBP 24 million, and our debt, net debt only increased slightly to GBP 120.6 million, despite the nearly GBP 13 million paid out in dividend, the EBT, and on share buyback. This shows that the business, through its proactive capital allocation policy, has the ability to balance both the short-term shareholder returns whilst retaining a flexible platform for future investments in or, in growth, be they organic or through M&A type activities. Looking at financial performance. This slide looks at the group and divisional performance on both an actual and constant currency basis. There were three main drivers of the actual revenue growth of 0.8%. One, firstly, volume; secondly, price and mix; and thirdly, FX.

[Mark Strickland, CFO at McBride]

The volume growth of 0.4% arose from contract and private label volume growth, combined with the aerosols continued growth. As I said earlier, that was offset by a reduction in the McBride branded volumes. The second impact was the price and mix impact, with two elements at play. Firstly, there's been an element of pricing pressure, but this has predominantly been offset through product re-engineering and ongoing margin management. Let me explain that further. In other words, whilst the selling price may be lower, the profitability is often similar to other products, as these are often lower cost format products. Secondly, there were more sales of lower value products in the first half of the financial year compared to that of the prior financial year.

[Mark Strickland, CFO at McBride]

The third and final impact was FX, mainly with the pound-euro exchange rate moving towards EUR 1.15 to the pound. The divisional review, looking at Liquids. At a revenue of GBP 269 million, the Liquids division represents around 57% of the group. As mentioned earlier by Chris, there was a limited impact in November and December from the SAP S/4HANA Go Live. Despite this, volumes grew 0.1%, with most markets stable and only France displaying a slight decline. Margins were impacted by competitive pressures, inflation, and some marginal raw material increases that couldn't be passed on to the customers, given their small size. The division still delivered an adjusted operating profit of GBP 17.7 million, which represents a return on sales of 6.6%.

[Mark Strickland, CFO at McBride]

We continue to invest in this business for the future. Moving on to Unit Dosing. For the first half of the financial year, the Unit Dosing division delivered a revenue of GBP 116 million. On a revenue basis, the Unit Dosing represents circa 24% of the group. Contract manufacturing volumes were weaker in the first half, the outlook is good for year-on-year overall volume growth in the second half of the financial year. The division delivered improved profitability in the period of GBP 12.5 million as a result of continued production efficiencies, the benefits of transformation, and ongoing tight overhead cost control. At 10.8%, the division's return on sales is a pleasing step up from the prior year.

[Mark Strickland, CFO at McBride]

Finally, the Unit Dosing division, through its Flexcellence initiative and the range of its formats it can now offer, for example, its soft pods portfolio, continues to be well set to continue to gain business in future tenders. Moving on to Powders. At circa 9.5% of our overall revenue, the Powders division operates within an overall steadily declining market. Sales at GBP 44.9 million were lower than expected, impacted by slightly softer private label demand, primarily in the U.K., together with delayed launches of new contracts and product mix changes. Adjusted operating profit declined by GBP 1.1 million to GBP 3 million, mainly due to the aforementioned lower revenue. However, because of good cost control, operational efficiency, and again, product cost engineering, the division continues to deliver a healthy return on sales in line with our medium-term expectations.

[Mark Strickland, CFO at McBride]

Finally, as with Unit Dosing, this business segment has a good pipeline for growth into the future. Moving on to aerosols and Asia Pacific. Between them, aerosols and Asia Pacific represent circa 9.5% of the group's revenue. Over the last few years, our aerosols division has been a huge success story. This was no different for the first half of 2026. Volumes grew by some 14.6%, whilst revenue grew by 18.1% to GBP 33.9 million, delivering an adjusted operating profit of GBP 2.1 million and closing in on our midterm return on sales ambitions. The growth is supported by significant contract wins in Germany, combined with personal care launches elsewhere in Europe.

[Mark Strickland, CFO at McBride]

The first half of financial year 2026 also saw the continuation of the significant investments for capacity expansion at the Rosporden site in France. This investment is on course for completion in the second half of this financial year. Our smallest division, Asia Pacific, has been impacted by a subdued private label demand in Southeast Asia and has had to focus on cost management to preserve its profitability. That said, it has made good progress in private label household in Australia. Whilst currently being an incubator business, we still remain optimistic that there are significant opportunities which will mean that we will be able to grow this business over the next couple of years. Looking at costs. For the first half of the 2026 financial year, input costs remained flat, benign overall.

[Mark Strickland, CFO at McBride]

As you can see from the left-hand chart, they still remain significantly higher than in 2021. Inflation is still prevalent, and some costs are still rising, albeit at slower rates than over the last few years. Hence, McBride's continuing focus on margin management has been key to the delivery of this solid set of results. This consistency of performance means that McBride, as a group, remains very well placed to sustain underlying profits in future years. 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.

[Mark Strickland, CFO at McBride]

Chris has indicated that the wave one of the S/4HANA project has successfully gone live in the U.K., and we expect to complete the rollout of the project during the 2028 financial year, which is in line with what we indicated when we set sail on the project. We continue to invest into and benefit from our data analytics function. Real-life example of this capability is some of the market analysis information that you saw in Chris's earlier presentation. In terms of overheads, as you would expect, we continued our focus on cost optimization. Overheads costs have been tightly controlled, with reductions in both distribution and administrative costs as a % of revenue. Moving on to other financials. Year-on-year interest remained broadly flat, as did interest cover.

[Mark Strickland, CFO at McBride]

Exceptional costs were GBP 2.4 million relating to the SAP S/4HANA implementation and an ongoing review of the group's strategic growth options. Regarding taxation, the effective tax rate in the first half was 30%, which compares to the first half in 2025 of 25%, but a full year rate of 32% in 2025. The actual tax paid in half 1 was GBP 1.8 million, compared to GBP 7.1 million the previous year, as the cash payments normalized to the payment of in-year liabilities only, as opposed to FY 2025, when there was an element of catch-up from the financial year 2024. At GBP 14.8 million, capital expenditure levels were up from GBP 12 million the previous year as the business continued to invest in the future.

[Mark Strickland, CFO at McBride]

It is expected that the group will spend around GBP 30 million-GBP 33 million over the current or current full year, and that the level of expenditure will continue at circa GBP 30 million for the following year before dropping off in line with the completion of the SAP project. Finally, on to net debt. As indicated at the start of my presentation, the business continues to generate strong cash flows and resulting in net debt control and a small increase to GBP 1.206 million. The business has strong core liquidity, with around GBP 135 million of headroom, and also has an unutilized EUR 75 million accordion facility, providing continued optionality for future capital allocation decisions. In conclusion, the business continues to be run well.

[Mark Strickland, CFO at McBride]

The share buyback delivers good value for our shareholders. As a result of the successful SAP global template implementation, future implementation risk has been significantly reduced, and the business still has optionality through its balance sheet strength. Thank you. I'll now pass you back to Chris.

[Chris Smith, CEO at McBride]

Thank you, Mark. As you've heard throughout the presentation, business momentum is good, and the first months of our second half have seen volumes in line with our estimates, with the start-up of new business wins still on track to meet the timelines required to meet our second-half targets. As mentioned earlier, the private label market overall is expected to maintain its strong position of recent years, with some potential for further growth if private label continues to grow share. We expect material costs to remain stable, possibly with some weakening of pressure for natural alcohol-based materials and recycled content plastics. Other inflation is being managed through tight overhead control and vigilance on allowing new costs to creep in.

[Chris Smith, CEO at McBride]

Our teams have delivered really well on all our transformation initiatives, and the recent success of such a major milestone of the first SAP go live gives confidence about the rollout of our global template to all other locations over the next two-three years. This should be seen as a big risk reduction point for investors, and the focus will turn to driving the expected efficiencies, enhanced insights, and better decision support. At this stage, nearly two months into the second half, I'm pleased to confirm we expect to deliver full year results in line with analysts' expectations. With our normalized funding position alongside ongoing high profitability levels, the reset, resilient, and stronger McBride is poised to consider a range of future value creation ideas to support our midterm ambitions to grow the group further and deliver still higher margins. Thank you. For questions, I think, Andrew.

[Moderator]

Thank you very much, gentlemen. Very comprehensive and impressive performance continuing, which is good to see. Plenty of questions already in, so let's dive in. First of all, about S/4HANA and the Wave One. Can you comment a little bit more about what you've learned from the process? No systems integration usually happens without some teething issues. We have a related question, why did you choose to roll it out in Liquids first?

[Mark Strickland, CFO at McBride]

Shall I pick that one up?

[Moderator]

Yeah.

[Mark Strickland, CFO at McBride]

We've learnt an awful lot through the process, far, far too much to sort of go through in this, 30, 40 minutes. The biggest one is testing in volume. It's the volume testing, particularly in warehousing. We had a very, very narrow issue within what's called a VNA, a pick and dispatch area. Third party logistics worked well, third party warehousing worked well, but Middleton has a very specific need for putting product into and out of what's called very narrow aisles, and we didn't test the volume enough through that. Ultimately it worked, but we became a little bit capacity constrained. you know, testing volume was a big learning.

[Mark Strickland, CFO at McBride]

Training was a little bit last minute, we also know we don't want to do it too early. We also concentrated on what's called the happy path, so when things go right. We probably, in hindsight, should have concentrated a little bit more on what's called the unhappy path, so how do you correct things when they go wrong? Overall, I'm very pleased with the implementation. There's lots of, you know, peripheral learnings. There always are. You know, I think the way the whole team pulled together really displayed the McBride ethos and the McBride values, both the project team and the site team, it was a combined effort. Sorry, what was the second part?

[Chris Smith, CEO at McBride]

Why U.K.?

[Mark Strickland, CFO at McBride]

Why the U.K.?

[Moderator]

The U.K.

[Mark Strickland, CFO at McBride]

Essentially because we have, or we had two instances of SAP, one in the U.K. and one in Europe. The U.K. only had two sites, so it was the simplest to move across onto new SAP. We would have had to move 12 sites, you know, and we would have ended up with three different instances of SAP, whereas moving the U.K., we only kept at two instances. It was a bit of an easy decision, really.

[Moderator]

Understood. Thank you. A number of questions about inorganic growth. You know, Chris, you referred to your low EV/EBITDA rating, although it is improving. We have a question, is that a hurdle for you to make larger acquisitions?

[Chris Smith, CEO at McBride]

Well, yes, I think certainly when it was down at three and a bit times as a multiple, it was a huge hurdle. I mean, look, the level of M&A that we might be looking at, in fact, the inorganic can also extend to contract manufacturing opportunities with where you might need capital. You may not need new sites, you just may need to fill your existing facilities with new capital. You know, the ranges of values that we're talking about are all manageable with our debt facilities. Look, you know, there's a lot of benchmarks in the industry at the moment around what people are paying for home care businesses with the Reckitt transaction with Advent recently. We also know there was one in Spain recently.

[Chris Smith, CEO at McBride]

We have a, you know, I think the industry is kind of homing in on what that range of multiples need to be. I guess that having got the share price back up a little bit and got better value for shareholders, with our rating today, you know, we get closer to making it not so meaningfully difficult, if you like. Look, I think in most cases on the M&A side, the synergy benefits can be quick, and then therefore, you know, we'll also look at speed with which we get that multiple down post-acquisition with synergies.

[Chris Smith, CEO at McBride]

Yeah, we're acutely aware of the challenge around multiples. I think we've narrowed the gap. I think we, you know, we know what we need to pay. I don't think shareholders, we're not gonna be out there paying eight or nine times for anything. People shouldn't worry.

[Moderator]

Looking at potential targets, could you say in a perfect world, which we definitely don't live in, you know, which segment or which region would you most like to increase or find bolt-ons to add on to the current structure?

[Chris Smith, CEO at McBride]

Yeah, look, I, look, we will absolutely align our M&A targets and contract manufacturing, frankly, with the key missions and the strategies of the company, right? Look, we're a European-focused business, you know, we're not gonna be, I suspect, suddenly acquiring stuff in the U.S. or South America. Our focus is in Europe. There's a little bit of, obviously, focus in Asia around how we develop that business, that incubator business that Mark talked about, to make that more substantial, a little like we've done with aerosols, right? We've got that business now to be credible and valuable to us, and we're on the same mission, of course, with Asia.

[Chris Smith, CEO at McBride]

Look, the bulk of it will be in Europe, we talked strongly about the bulk of our activities are gonna be in the higher margin, high capability categories where we're strong. You know, laundry, dish, that sort of area, are probably the main focal areas.

[Moderator]

Good. Now, you've preempted a question here about contract manufacturing. Is that another part of the business quite competitive at the moment that you would still be looking to grow capacity and scale in?

[Chris Smith, CEO at McBride]

Totally, yeah. I mean, we've said strongly we wanna get contract manufacturing to be 25% of the business. We don't wanna do that by shrinking private label, we wanna do it by growing contract manufacturing. We believe that 25% is the right level for us to have a kind of core layer of solid long-term, you know, partnership or relationships with some branders for categories and volumes that may not be efficient for them to manufacture. Yeah, absolutely, that's a key part of our focus, and it's another potential use of capital to create long-term value. absolutely. There's, you know, there's quite a lot going on in the industry at the moment, so we, you know, we're quite busy with potential opportunities.

[Chris Smith, CEO at McBride]

Nothing certain, you know, there is, there's more at the moment perhaps than we've seen for some time potentially out there.

[Moderator]

Yeah, this leads on to a question about capital allocation, and then perhaps an opportunity for you to say how long a gestation period certain acquisitions can take to come to fruition. The question submitted is, "How do you look at the contrast between value in your own shares and doing more buybacks or allocating it in terms of non-organic growth?

[Chris Smith, CEO at McBride]

Well, you know, we're constantly looking and reviewing this, of course. I think, you know, we like to think of. You know, we believe we've got a short-term need sometimes, like with the share buyback right now and the acquisition of shares for EBT. We recognize that we have investors that like the dividend stream, and we think that the share and the equity is a mixed proposition on, you know, index re-rating, as well as cash from things like dividends and other shareholder returns.

[Chris Smith, CEO at McBride]

We also recognize we, the industry, and I would say the McBride platform needs to expand in the mid and long term, and we recognize in this industry that consolidation of the space for the benefit of retailers, I think the sustainability journey and regulatory environment is gonna become tougher, and you need to be bigger and bigger in this industry to lead. I think, you know, we have all those at play, and we have, you know, active conversations. I guess, you know, the board's call here is at each juncture, what is the right decision? I think we'll. You know, we've demonstrated in this last period a fairly agile and, you know, what's the word? Variable. Not variable, it's the wrong word. Mixed approach.

[Chris Smith, CEO at McBride]

We're looking at all options.

[Moderator]

Yes. Well, that's the, you know, the benefit of financial health and a balance sheet that allows flexibility.

[Chris Smith, CEO at McBride]

Correct

[Moderator]

To adapt to opportunities, I would think. You know, perhaps, a couple of questions for you, Mark, on costs. Impressive progress, and the question is, you can't, ad infinitum cut costs as a % of revenues. What do you think is a realistic target in the medium term as the transformation benefits all work their way through?

[Mark Strickland, CFO at McBride]

Yeah, I think it's a very good point. At the end of the day, on occasions, it may actually be worthwhile putting extra cost into the business because the benefits you get back from that extra cost far outweigh the cost. I don't have a particular target in mind because it depends on, you know, the different segments of the business, you know? The different segments will have different overhead needs. You know, as we invest into technology, I would hope that a lot of the speed of decision-making comes down, but also the cost of that decision-making comes down. Also, let's not forget that the software companies also like to put up the license fees as well for utilizing that software. It is a balance.

[Mark Strickland, CFO at McBride]

I don't have a specific ratio or a specific cost in mind, but I always talk about cost optimization, not necessarily cost saving, because we can't save ourselves rich. We do have to invest in this business, and we do have to grow the business. You know, saving will keep us in business, but I don't know anybody that's ever saved themselves rich.

[Moderator]

Wise words, wise words. Specifically on input costs, we've got a comment, which is very true, that you're not involved in the supply of precious metals or rare earths that can make some businesses in a particularly painful position at the moment. Are there any concerns within the supply chain more about the cost of shipping or anything like that as you move some of the basic commodities around to your sites?

[Mark Strickland, CFO at McBride]

At the moment, you know, I'm being honest, it's pretty benign. It's relatively flat. Okay, we've got underlying inflation, but we can recover that through efficiency. At the moment, we don't foresee any particular headwinds. The only caution I would say is, you know, we don't know what Donald Trump may do next. I guess, but that's fair. You know, that's a concern for everybody. Everything else being equal, you know, we see the raw material environment, the shipping environment, as, you know, being pretty benign.

[Moderator]

Okay, probably also for you, Mark, you'd mentioned that in the half, there were more the mix saw more lower value products. Is there any specific factor behind that, or might we see that rolling into the second half as well?

[Mark Strickland, CFO at McBride]

I shouldn't get overly concerned that it's a lower headline price, because ultimately we're interested in pound notes margin. It will depend on, you know, which retailer, which product sets, what we've won, what we've lost. Lost, sorry. There will always be a natural ebb and flow in our mix going through. No, I don't think there's anything, there's certainly nothing concerning me about our mix at this stage.

[Moderator]

I suppose related, and not necessarily a question for McBride, but someone has commented that, "Is there an ongoing trend of end consumers effectively getting less volume in their product at a higher cost?" I suppose that all weighs up in the, you know, the battle for market share with brands.

[Chris Smith, CEO at McBride]

There, there is a trend a bit, you know, some sustainability driven, even cost of transport and so forth, to compaction. It's even quite variable across Europe. You know, if you buy a laundry liquid in southern Spain, you might have to, you know, need weightlifting training to lift your four-liter bottle home. The same number of washes in Germany or the U.K. will be in a one-liter bottle. There is a perception, potentially a % perception of value gap when you make that transition, 'cause your, what you're buying looks a lot smaller. I think, you know, it's the right thing to do, and we will continue to progress that on the grounds of sustainability and pure.

[Chris Smith, CEO at McBride]

You know, we get a lot more bottles of 1 liter, laundry liquid in a lorry than four-liter bottles, right? Value too. I think the value position for consumers is perhaps more driven by the quality of performance than it is around pure value position in price points on shelf. The reality is, that private label continues to outperform many of the brands in tests, and, you know, wider and wider audiences are learning that, and I think understanding the value option does just as good a job, right? I think, you know, we will continue to fly the flag for private label as a whole, not just for McBride, of course, around helping consumers understand the value.

[Chris Smith, CEO at McBride]

It's not just a product, you know, for, excuse the expression, for poor people. This is for smart people, because why do you need to spend twice the price, and have no improvement in your cleaning performance? By the way, most of the things you buy, you put under the sink and never look at again. It's not like that you're buying something beautiful to look at. I think, you know, the consumers are becoming more savvy, and the retailers are supporting that with their, with their proposition.

[Moderator]

Again, perhaps just a couple of more strategic questions, to finish with. Can you comment as much as you'd like to, about what your various competitors, in certain, divisions are doing, and also the same question for contract manufacturing?

[Chris Smith, CEO at McBride]

Look, I think the industry as a whole, you know, is relatively steady. I would say in the private label space, I think we see, you know, quite an orderly set up at the moment. I think, look, we've all, the private label industry, if you, the private label share chart I showed earlier, which went from around 30%, 30%, 31% up to 36%, you think, "Well, that's only 5% or 6% growth," but actually it's 5% or 6% on 30, right? The private label space, the majority of the big players in private label are still active in private label. They've all grown with that market, and I think we've all been going through that.

[Chris Smith, CEO at McBride]

Of course, it's helpful when we're a manufacturing business, right? Putting volumes through manufacturing plants is always helpful in terms of overhead costs and recoveries. Nothing particular to comment, I would say. The contract manufacturing space, you know, there's obviously some publicity around the Reckitt's disposal of Essential Home into private equity hands. That's going through a transition at the moment, that may create opportunity. You know, we are seeing on average across the European space at least, and something to Asia, where there's optionality being considered on outsourcing more perhaps than we've seen for a while. Maybe I'll leave it at that, Andy.

[Moderator]

Okay, I think good notes on which to finish. You referred back consistently to very good progress against the Capital Markets Day targets that were set a couple of years ago. There is a question: is, you know, given that rate of progress, might you be reassessing some of those targets and setting further medium-term objectives in the not-too-distant future?

[Chris Smith, CEO at McBride]

Well, look, yeah, look, we look at strategy every year, we look at our targets every year. You know, we're not gonna reset them every year, of course, in the public domain, but we would, of course, look at some point to update that and refresh that. We haven't set a time on that at the moment. In fact, Mark and I were just talking about it yesterday as to when that might be. You know, look, You know, I'm a big believer in being clear on the direction we're taking the business, the understanding of that within our teams and for our customers and suppliers, of course, is super important. You know, we remain vigilant on adapting, course correcting, you know, filling in gaps that we think we've missed all the time.

[Chris Smith, CEO at McBride]

We, you know, we don't sit still with those ambitions and those, strategic ambitions. Yeah, there will be a point, maybe in the next year, where we will have to do that update and refresh. Look, we're very positive about the progress. We need to continue to progress our medium-term ambitions of getting revenues over GBP 1 billion, and EBITDA up to 10%. You know, Mark and I have always said that we wanted to continue to move the EBITDA up, double again, right? But we will need a bigger train set, probably, to do that than we've got today. We're also gonna do that in the right, judicious way, when the time is right.

[Moderator]

Well said. Great! Well, can I thank our audience for their interest and the very interesting range of questions. You will receive a feedback form after this event, which the company would be delighted if you could share your thoughts over. As mentioned already, the deck used is on the McBride Investor Relations page, along with lots of other materials. In terms of looking forward, which the company can't be too specific about, there is, of course, a recent Equity Development research note after the interims, with, I'm glad to say, an increased fair value of 245 pence a share, that these two gentlemen are smiling at approvingly, that I'd recommend you review for further detail.

[Moderator]

Last but not least, of course, many thanks to Chris and Mark, and congratulations not only to them, but the whole McBride team on many years now of very impressive progress, which we hope will continue through the second half and beyond. Thank you for your time, gentlemen.

[Chris Smith, CEO at McBride]

Thank you.

[Mark Strickland, CFO at McBride]

Thank you too. Thanks, everyone.

Participants

Executives

• Chris Smith, CEO
• Mark Strickland, CFO

Analysts

• Moderator