A positive trading update and encouraging cost-saving initiatives from European manufacturer of 'own brand' goods McBride (MCB) prompts a 3.3% advance in its shares to 158p.
The company is reaping the rewards of cost-saving initiatives and its restructuring project as full-year operating profit is expected to be higher than previous expectations.
Purchasing-driven savings have helped to rationalise the group’s customer base and contributed to anticipated higher revenues.
McBride can now focus on clients that generate higher profits and remove obstacles to greater efficiency such as loss-making or time-consuming customers.
Analysts are positive, noting a smaller client base will shorten the R&D innovation cycle and create a focused service-orientated business model, which will improve margins and the quality of revenue.
Liberum has issued its third upgrade for McBride’s this year and rates the stock a ‘buy’. It predicts that earnings will grow by 16.5% over the next three years, and also forecasts material debt reduction.
According to the broker, the valuation of the manufacturer appears too cheap. McBride says Brexit has not impacted its operations in the short-term, although it is too early to determine long-term effects with 70% of subsidiaries based outside the UK.
