McBride (LSE:MCB) Q4 2026 Earnings Call

0:00 Lennard Markestein, Marielle Claudon, Helen Herd Right, let's get going. We're very pleased to welcome McBride back. And as you know, they've just released the full year results for the period to the end of June. And it's been a very, very busy, but a very successful year, which I'll let our guests go through in detail. Just a couple of points of admin, if you're not familiar with Zoom.

0:48 The presenters will be taking questions after they've gone through the formal presentation and you can just submit that through the Q&A button. The slide deck that the boys are talking to is already publicly available. It's on the McBride Investor Relations page along with a lot of other useful material. and finally at the end of the presentation when we close the webinar participants will see a very brief feedback form and certainly the company will be very grateful if you could spend just one minute sharing your thoughts on that.

1:34 Right, we're very pleased to be joined by CFO Mark Strickland again and CEO Chris Smith. And I'm now going to pass over to you, Chris, to start the presentation.

1:53 So good morning all and thank you very much for joining this presentation this morning. Our format today will follow the agenda we're showing on this page here. I'm going to cover off the headlines and update on our business progress including the latest on market data and then Mark will take you through a more detailed look at our financials before I summarize our outlook and of course we then as we said as Andy said we move on to questions. So moving on to the headlines header here, before I perhaps move on to the detailed slides, I would like to comment that the last 12 months has been hugely positive for the future of the group with a successful first go live and our major SAP IT systems rollout and all the work we've completed leading up to the recent two growth announcements.

2:40 The impact on our full year earnings from the rapid inflation that we saw in quarter four as a result of the Middle East crisis perhaps has slightly taken off the shine, has taken the shine off a year of really strong strategic delivery. I can only compliment and be super proud of the entire McBride team which has continued to perform exceptionally well delivering on our midterm ambitions whilst also coping with all that's been thrown at them in what is a very volatile world at this moment. As you'll hear through the presentation, the McBride offer continues to be compelling for retailers and for consumers and our size, scale and capabilities increasingly catching the attention of branded businesses who wish to step away from manufacturing and variabilise the cost of their supply chains.

3:29 So on to the main headlines. Overall, the group has reported a resilient set of financial results against the backdrop of very difficult and uncertain trading in the latter part of the second six months. Without the fourth quarter profit hit as a result of the timing lag between pricing recovery from customers and the impact of raw material cost rises, the business was on track to report a third consecutive full year of profitability in line with our strategic ambitions. Thank you very much. At the intrams in February, we indicated some positive momentum on volumes as a result of contract wins across most of our divisions.

4:31 As a result of the inevitable difficult conversations with customers around price rises, we saw delays and slowdowns in the rate of these new product launches. Subject to progress of ongoing price conversations, however, we would expect most of those should start up in this next first half year of the new financial year. As you will see shortly, the latest market data indicates private label penetration in household products continuing to progress, reaching all-time highs for the 12 months to June 2026. In the early months of the new financial year, while probably still a bit early to call, we do see certain signals of further private label push from a number of retailers given expected inflation pressures for consumers.

5:19 A lot has happened since the financial year closed in June with the group starting to deliver on its strategic intent to expand the group's footprint through inorganic growth. We completed the previously announced acquisition of the specialist tableting business Eurotabs on the 1st of July and in August we announced the transformative arrangement with Vestasi which will see material contract manufacturing growth for the group. At the interims, we outlined our balanced approach to capital allocation. We have in this last financial year allocated £18 million on a variety of benefits to shareholders, covering dividends, share buybacks and share purchases to prevent future dilution. The combination of this considered approach, resilient financials and the two growth projects recently announced has seen the share price rise over 60% since this time last year.

6:17 I'm now going to move on to an update on our strategic progress. Some more detail on the recently announced growth projects as well as divisional performance updates. Our 2024 Capital Markets Day clearly set out a series of headlines for the group. I'm pleased to report good progress against all of these targets in the second year, second full year post the Capital Markets Day. In terms of growth, whilst the past year was slightly behind the target overall, our compound growth rate over the last three years is over 3% and ahead of our target. Profitability levels slipped in quarter four, as I mentioned already, and as a result, our 2026 EBITDA margins ended lower than our ambition. But we remain committed to the 10% target.

7:06 The transformation programme and the recent deals announced will help on this journey. Debt levels are in good shape, and that's after deploying £18 million in shareholder returns. We will see this debt ratio rise a little in the next year as a result of the acquisition and the Vestasi agreement. Rocky has slipped slightly, mostly as a result of higher investment levels, but remains nicely ahead of our midterm targets. As you will hear later our transformation agenda continues to make progress with over 10 million pounds of additional benefits this past year and on track for the cumulative 50 million pounds by the end of FY28.

7:51 The business and the board are super focused on delivering the strategic ambitions for McBride and its shareholders and stakeholders and we remain confident in our strategic direction to deliver on these targets in the midterm. So I'm going to move on now to talk about the first of our two recently announced growth projects. We informed the market about the proposed acquisition of the Eurotab group back in April. And it was pleasing that the transaction completed just after the year end on the 1st of July. The Eurotab group comprises three well-invested manufacturing locations, two of which are in France, and the third is in Turkey. The product ranges are all hard tablet formats, covering three categories. The biggest volumes are in auto-dishwash tablets, very similar to the ranges that McBride supply already, with the other two categories new ones for the group, namely disinfection tablets, such as bleach tablets, and the other is humidity absorption blocks.

8:52 It is expected that Eurotab will add circa 65 million euros of top line to McBride this current financial year. Net consideration finished a little lower than we originally expected at 32.8 million with a multiple on acquisition at 4.6 times and is forecast to fall to 3.1 times post synergies. The acquisition presents a series of strategic advantages. First, it provides additional auto-dishwash tablet capacity, especially in the all-in-one category, providing the unit dosing division with opportunity to load balance its output from its existing two factories, optimizing product costs as well as service reliability. Extending our market reach into Turkey is an exciting prospect, with good relationships at Eurotab Turkey with a number of the large major retailers in the Turkish market.

9:49 In addition, the two new categories will provide opportunity for growth using our extensive network of customers and geographies. There are strong synergy opportunities such as raw material buying, production efficiencies, including from investment backed automation, alongside overhead simplification. We expect this to be accretive to earnings per share and profitability from day one, with opportunity through synergies and optimisation to support the group's ambition to raise overall margins towards the 10% EBITDA level. Moving on to the second recent announcement concerns a new long-term agreement with Vestasi. For those of you who don't know, Vestasi is the new name for the former essential homes business of Reckitt Benckiser, which was divested in 2025.

10:40 Our agreement, which is for between five and eight years, will see the majority of Vestasi's European production in the hands of McBride. Our compelling proposition was centred on the range of geographic locations in the McBride manufacturing network, our scale and quality of operations alongside the raft of services that McBride can provide to Vesta C in the future, such as product development, distribution and purchasing. This deal will at maturity grow our revenues by an estimated £170 million by the second half of financial year 2028 and will take the group's ratio of contract manufacturing beyond the 25% strategic ambition we outlined in our 2024 Capital Markets Day. The agreement requires McBride to produce a material increase in volumes, some 180 million units per year, requiring a significant level of capital expenditure, the majority of which is being funded by Vestasi, with McBride spending approximately £17 million over the next three years to cover project costs, separation and integration, and some limited amount of capital.

11:47 As part of this deal, McBride will acquire two former Reckitt, now Vestasi factories for a nominal consideration, expanding our footprint on the Iberian Peninsula with the addition of a site at Granolas near Barcelona and Porto Alto in Portugal. This transformational agreement is a further proof point of McBride's world-class capability with a significant scale of our operations bringing value to major brand owners. I'm going to move on now to the market situation overall and the progress of private label within this market. Our latest market data analysis, which as a reminder only covers the top five economies of Europe, but for which we use as a proxy for the total market, shows further progress in private label share.

12:38 In the year, the total market was actually flat, with private label outperforming brands yet again, and raising private label share in volume terms by one percentage point to 36.7% at June 26. Interestingly, across the last three years, the total market has grown around 3.3%. in line with our long-term assumptions but in that time brands have been flat with private label driving all the market growth and private label share rising 2.5 percentage points to the 36.7 share I just mentioned. Across the countries we see France, Germany and Spain maintaining consistent private label growth year over year and the UK after a dip in 24 and 25 recovering this last year with private label share back to where it was in 2023.

13:31 In category terms, we see all categories gaining in private label over the past 12 months, and with the exception of Dish, branded volumes down between 1 and 2%. Over the past three years, market share for private label has grown most strongly in Dish, which is now up to 44.6% by volume share, some three percentage points higher than three years ago. Digging deeper into the data at customer level, we see quite some varied performances. Our biggest customer, which is Aldi, has only seen moderate volume growth over the past three years, and in fact for us, lower volumes last year. On the other hand, Lidl, a smaller customer firm at Bride, has seen growth over the past three years of 20%. Hence, overall, the outlook for the market seems favourable, and our estimates over the last three years have played out in total, albeit at a customer level with some varied performance.

14:27 I mentioned earlier it is still too early probably to call however there are some signals of private label focus from a number of retailers across many markets in light of the continued consumer inflation pressure. I'm now going to move on just to discuss briefly each of the divisions and first I will talk about our liquids business which is our biggest division with over 55% of the group's sales. It has not been an easy year for the liquids division as a result of an active competitive landscape with margin pressures throughout the first half year from a significant level of customer tenders. Additionally of course margins were under further strain with the inflation surge for all materials packaging and freight in the fourth quarter. The impact of this recent inflation is most impactful for us in this division.

15:17 volumes were slightly down in the year mostly actually from some of our own branded products which have been weaker than we expected with private label and contract manufacturing volumes broadly flat like all other divisions intense discussions with customers in q4 concerning price rises led to stop shipments and new launches being delayed impacting sales volumes in the last two months That being said the business has a good win-loss ratio in tender activity and we expect launches to support growth in the new financial year. The division has continued of course to be active with its operational focus both in terms of productivity, smart capital expenditure, supporting efficiencies, new product formats and sustainability and operational discipline.

16:02 It's particularly pleasing to report excellent safety and performance improvement with accident levels over 50% lower in the factories. The post-year end announcement of the partnership agreement with Vestasi will benefit primarily the liquids division, with 90% or so of the volumes awarded in liquid formats. This will drive significant growth for the division and over 40 million euros of investment in capacity scheduled across its plants across the next two years, including the newly acquired sites in Spain and Portugal. for our unit dosing division overall volumes for the business were down over two percent despite actually growth in private label in line with a wider market contract volumes in particular were weak across a range of different customers and countries Profitability picked up and improved year over year as a result of strong discipline around its costs, improved factory performances and an improved mix.

17:02 Our new soft pod for auto dish has launched well in the last 12 months and we've continued to allocate capital to increase capacity in this growing category. Like all the businesses in the group, the Middle East crisis drove inflation for the unit dosing division with prompt action on pricing recovery against the backdrop of the usual competitive tension, but especially in the capsules market where currently there's excess levels of capacity. As I mentioned earlier, we have now completed the Eurotab acquisition, which is an entirely unit dosing business and the division is busy with its integration activities. This acquisition brings a step up in scale for the division, adding around 25% more revenues, and once synergies land, we should see growing profitability levels, enhancing the overall unit dosing performance.

17:53 The powders division recorded good volume growth, primarily in the second half year on the back of new business wins and good run rate volumes, especially in Germany. against the market backdrop of declining volumes in the branded space, private label volumes have remained resilient with the value for money proposition resonating well with consumers. 40% of the division's revenues are actually from contract manufacturing, which is relatively flat through the year with effort and focus on format changes and new formulations ready for the new financial year. Our profitability in this division did reduce slightly in the year, mostly as a result of the weak first half and the momentum into the second half looking good and strong.

18:40 Moving on to our two smaller divisions and first the aerosols business which had a fantastic year with really strong volume growth 13% up in private label and just over 10% in contract manufacturing. The business exited the year with volumes on an annual basis in excess of 100 million cans target that we set the business two years ago and some 50% up on where it was three years ago. This was supported by significant investment in capacity which completed during the year. Run rates in the early part of the new year are now in excess of 100 million cans and we look to see the business now stabilise and drive profit margin ratio improvement in the coming years. The Asia business saw good growth in its top line in value terms, albeit in volume terms as reported lower volumes, mainly as a result of distorting volume measure in the Vietnam business with underlying growth closer to 5%.

19:35 This was driven by a strong performance in Australia including the launch of our first household ranges manufactured in Malaysia and stronger demand for local customers in the Malaysian market. The business continues to be active to drive further growth from its excellent platform at the Kuala Lumpur facility supported by recent international quality accreditations. So that concludes my overall business progress update. I'm now going to hand over to Mark who will show how all this manifests in our financials.

20:08 Thank you Chris and good morning everyone. I'm pleased that yesterday we reported a resilient set of results for the financial year ended 30th of June 2026. So let's have a look at the financial highlights. Looking at the financial year at a headline level, I'll come on to more detail in subsequent slides. Revenues are up £7.7 million or 0.8%. However, on a constant currency basis, they reduced £17.3 million or 1.8%. as a business we continue to closely analyze forward-looking raw material and packaging trends adjusting sales margins as appropriate however the impacts of the middle east crisis were felt in the final quarter of the financial year meaning that adjusted operating profit at 59 million pounds was 7.1 million pounds less than last year Earnings per share showed a slight reduction year on year of 0.5 pence per share, driven by an earnings reduction of 1.2 pence per share and offset by the normalisation of taxation rates and forex.

21:21 As Chris says, we have delivered some £18 million of shareholder returns in the year, an increase of £15.6 million year on year. and over the last four years we've progressively strengthened our balance sheet through cash generation and debt reduction. Thank you very much. Lennard Markestein, Marielle Claudon, Helen Herd in McBride's case and to add a little context we experienced an inflationary impact on our raw materials and packaging of some 12.2 percent in two months So the speed of increase was far greater than that of the 2021-22 inflationary period when that level of increase happened over 12 months

22:55 accepting that the previous inflationary period ultimately peaked at significantly more than the 12% in total. We estimate that the impact of the war was circa £6 million on the financial year, which would have meant an adjusted operating profit of circa £65 million. We've already been out to customers and achieved price increases. However, given that the conflict is clearly more prolonged than originally envisaged, we are continuing to have that dialogue. Moving to transformation. The business has now cumulatively delivered £15.3 million in net benefits and remains on target to deliver the £50 million of net benefit by FY2028.

23:48 In respect of the SAP implementation, the global template has been proved and the project has moved on to delivering Wave 2 in Q4 FY2027. Additionally, it should be noted that the implementation is increasingly moving from a specific project to more of business as usual rollout site by site and that is currently anticipated to be the modus operandum for the site implementations post wave 2. The Service Excellence Project completed in September 2025 and has delivered real benefits. However, in the final quarter of the year, service was impacted by certain retailers' reaction to the requested price increases.

24:39 The Commercial Excellence Programme completed in December 2025 and it is estimated that the project has contributed £3.8 million of net benefit to the 2026 financial year. Finally, Productivity Excellence has delivered £6.5 million of benefits with OEE efficiencies delivering slightly more than 2% improvement. So looking at the income statement in a And for all you technical experts, here is a slide that is absolutely full of numbers that you can analyse at your leisure. In brief, what is this slide saying? Well, looking at the income statement on the left-hand side, sales up, sorry, at actual rates on the left-hand side, sales up £7.7 million.

25:31 Cost of sales rose £5.3 million, distribution costs increased £2.2 million and administration costs rose £7.3 million. Lennard Markestein, Marielle Claudon, Helen Herd Chris has covered the individuals in far greater detail earlier in his presentation so I'll not dwell on this slide but just to reiterate the point that as you can see both actual at actual and constant currency our liquids division has been hardest impacted in the 2026 financial year both in terms of revenues and adjusted operating profit so now let's look at costs For most of financial year 2026 input costs were broadly flat but as this slide illustrates there was the previously mentioned significant pickup in the final quarter arising from the Middle East conflict.

26:58 Given the current situation and the underlying rhetoric between the two sides we are not anticipating a quick resolution. Thank you very much. Hence McBride's continuing focus on margin management has been key to the delivery of the financial year 2076 result and will continue to be so in 2027.

27:47 Coming back to overheads, as I said, whilst distribution and admin costs increased by £9.5 million, Forex accounted for £7.2 million of this. So excluding Forex, distribution costs fell £0.3 million, whilst administration costs increased by some £2.6 million, primarily due to recalculations of the expected cost of long-term incentive plans to align with the higher share price, and also software as a service which effectively moves costs from depreciation into running costs and that is particularly as wave one of our S4 implementation went live in November. Looking at other financials Interest paid reduced to £7.3 million in the financial year.

28:39 Please note that the P&L finance charge of £10.2 million also includes such things as pension finance costs, £1.2 million, the costs of the one-year RCF extension, £600,000, and variously amortisation of facility fees, lease interest, etc. We currently expect the P&L charge to increase to £13 million in 2027 as a result of the Eurotabs acquisition and also some initial resourcing for the Vestasie deal, both of which will increase our core debt. Exceptional costs totaled £7.6 million, the main constituents being disruption costs arising from the SAP S4 Wave 1 implementation, the Eurotabs acquisition costs, costs incurred in investigating and delivering the Vestasie deal, and an increase in the Etampuis environmental provision, which we reassess as and when required.

29:43 In 2027, exceptional costs are expected to increase to some £12 million as the McBride project team is increasingly stood up to deliver the capacity increases required to meet the Vestasie contract requirements. Taxation in the year returned to more normalised levels with an effective tax rate of 25%. CAPEX was £31.2 million in year as the business continued to invest both behind the ERP implementation and mid-term growth. For the forthcoming years it is expected that CAPEX will remain at these levels as the spend on ERP is progressively replaced with expenditure on plants and machinery.

30:34 The IAS 19 pension deficit decreased to £18.1 million from £23 million, mainly due to the £5.7 million of deficit reduction contributions paid by the group. The UK scheme is closed to new members and future accrual and in terms of the outcome of the NTL versus Virgin Media case no additional liabilities are now expected. Finally the next tri-annual valuation is due at the 31st of March 2027. Just for completeness the group has other post-employment benefit obligations outside the UK Net debt increased to £122.8 million for the reason outlined earlier. The key points on this slide to note are that cash was high at year end and that was in anticipation of paying for Eurotabs.

31:38 The first one year extension of the RCF was exercised in November 2025, extending the RCF to November 2029. We expect to exercise the second extension in November 2026, which will then extend the RCF to November 2030. Finally, you will see that liquidity remains very healthy at £167.6 million. Moving on to shareholder returns. In 2026, financial year 26, a dividend of three pence per share was paid. I'm pleased today to announce that the board is recommending a 3.1 pence per share dividend for the 2026 financial year just ended, obviously subject to approval at the forthcoming annual general meeting.

32:31 As an aside, we appear to be becoming increasingly attractive as a mixed proposition share, comprising capital appreciation combined with income. In summary, the hard work of the last four years in rebuilding the company's balance sheet combined with the balanced capital allocation policy has now allowed us to both increase near-term shareholder returns whilst also investing in the mid-term future via our internal capital investment and also through the Eurotabs acquisition and the Vestasi strategic partnership. Thank you and I will now pass you back to Chris.

33:13 Thank you, Mark. I'm now just going to move on to summarize our outlook. So look, managing short term margin pressures feels like it will continue for most businesses in the coming months and maybe even longer. We remain resolute on minimizing the impact of rising costs and passing the minimum level of price rises to our customers. We expect that further price rises will be required in light of recent developments and will remain vigilant and agile in adapting in such volatile times. Despite the near term being so difficult to manage and predict, the business continues to pursue a range of longer term strategic projects. SAP Wave 2 is lining up for our next go live early in 2027 and we're well underway with the integration activities at Eurotab.

34:06 Activity to support the Vestasi agreement is building as we plan for the separation and integration of the two new sites which we expect to take over in February 27 and we we've now started the capital ordering process for that new capacity for long lead time equipment. The first two months of the year have seen volumes in line with our expectations and as mentioned earlier some possible early signs of extra pull for private label products in certain markets. We have seen before that in periods of inflation and uncertainty, private label performs well in our markets. So thank you for listening to that. That was our formal presentation done. And I think Andy, we will now move to questions.

34:56 Thank you very much, Jen. We're very, very clear. And just a reminder, we've got a number of questions already. Please use the Q&A tab to input them. A number of them about the transactions that you have been able to conclude. And the first one, quite a logical one. Have you had to increase your in-house team size for executing these corporate deals?

35:21 A great question. We are increasing it. We have, through the project, I guess, initiation and conclusion of the agreements, we've obviously brought extra people in to help. We've got a firm project team established now. We're recruiting to a limited level. We're not talking hundreds of people, but certainly from project delivery, yes, we will increase the size of the organisation to deliver that. That was part of the cost that Mark mentioned will be in exceptionals next year. and of course once capacity is live in the relevant locations we'll be recruiting operators and management grade people of course to manage that new activity again all within the business plan. Great, another I suppose obvious question, can I ask how long you had been pursuing the Eurotab and Vestasi deals and were they signed in competition with other potential buyers or partners?

36:19 I'll pick that one up. So Eurotabs, we initially kicked the project off in November 2024 when we reached out to LBO, who are a private equity company who owned Eurotabs. So that one... Thank you very much. in prime position to to sort of win the um the bid for Vestasie and we reached out probably 18 months ago on that um saying look we would like to to help them out ultimately Peter then reached out again probably six seven months ago um and said look we have an innovative Lennard Markestein, and should anything else come available we should you know hopefully people will pick up the phone to us

37:50 That's a very nice secret to the next question, Mark. Thank you for that. These are obviously both significant deals in the context of McBride's size, two in a three month period. Is your success and your size going to make the possibility of other large deals a little more likely than it has been in the past? And I think everybody recognises you have to have a willing vendor to get a transaction.

38:18 Well, I'd like to think so. We've been resolute in remaining focused in the household space in Europe, building, you know, we recognize the importance of scale, we recognize the importance of distribution of manufacturing across the markets, and look in a world of increasing regulation and increasing pressures, of course. rightly so for sustainable products you know we believe that scale matters and I believe we can offer a compelling proposition to many brand owners and retailers alike to provide further opportunity for growth for us and to support them in their ambitions to grow their own businesses so yes I think the scale the increasing size of it will be helpful future targets yeah.

39:02 Lennard Markestein, Marielle Claudon, And perhaps the last one on the two deals. Do you expect the Eurotab acquisition and the Vestasie contract to be shareholder value accretive as opposed to just earnings per share enhancing?

39:34 Well, I think, look, we've seen a little bit of, I would say, positive momentum in the share price as a result of the announcements of those deals. Perhaps the growth of the share price is in excess of the amount of EPS secretion that we would get. So that would imply some form of re-rating. I think the model that we've set up and the sticking to our strategy and delivering on the scale, I think it provides that opportunity for further enhancement for shareholder value, yes. And would you say that these two transactions were strategically important to protect your position or were they actually structured bolt-ons to deliver enhanced growth prospects or indeed a combination of the two?

40:19 I would say it's a combination of the two. Yeah, I mean, the Vestasi transaction is part of our mission to grow contract manufacturing in our total portfolio, bringing all that scale and expertise to brand owners. I think on the Eurotab acquisition, this is about building on our strength in that category. providing us some optionality around platform for manufacturing and bringing some great technology that we get from that acquisition so I think it's a combination of both but we remain resolute in this household space. Great, perhaps one for you, Mark. Can you give a little more detail, if possible, on the impacts of the cost increases in the fourth quarter, how much they affected the overall full year results?

41:04 And would you be able to say what the EBITDA margin was during the fourth quarter? Or is that something you're... Yeah, so no, it's a good question, I think.

41:15 Implied that we probably would have been around 65 million EBITDA had we not had the impact of cost rises in the fourth quarter. And we've delivered 59. So the mathematics there is six. We don't really disclose margins into month or whatever. There's a lot of people watch these videos. So Lennard Markestein

41:56 Thank you very much. Thank you very much. We've got a couple of questions about capacity.

42:47 Can you give an indication how much capacity there is within the group at the moment? And obviously, there's a lot of investments and a lot of demand coming through. But how much would you say is free at the moment?

43:01 It's so varied by product categories and by location, so we don't really quote a single figure because it would be meaningless in total. But look, in principle, you can't really run half full factories in private label. Your margins are tight. You need to be efficient and effective and utilize your capacity as fully as you can. We have many plants that are 24-7 across the network. We have other plants that are maybe on shorter lines. Shorter shift patterns, for example. So there's always space. But we have we have physical land space that we can and as we discovered, you know, as we'll see in the Vestasie transaction, we will be, you know, exiting bits of warehouses that are existing in our factories out, you know, placing those outside and filling floor space with equipment, sit alongside existing equipment.

43:52 So, you know, as long as you invest in machinery and whatever, then we've definitely got capacity to grow further. And then looking forward specifically with the Vestasi partnership, can you provide a little more colour on the capacity deployment across your existing European manufacturing network that will be required to cope with the increased volumes?

44:18 Well, so as I said in my presentation, the volume growth is significant. We will be distributing that amongst a number of locations in the existing McBride network and amongst the new ones we've acquired as part of this deal. So we're bolting capacity into the territories where the end markets are most located. So we will be putting equipment into one of our Belgian facilities, well, both Belgian facilities, but particularly the Ypres factory, we're putting some into Italy and then minor installation improvement changes in UK and in I think in France as well as the other Belgian plants so so I think you know a number of our locations will take investment to support this growth targeted around where those categories are best produced and whether those geographic markets are best served.

45:08 that was a key attraction of the transaction was that we have a well-located set of operations and factories that are better suited to local you know presence in local markets. Good and a question could you just clarify you've got a very favorable deal of the amount of capital funding you're putting into the Vestasie transaction but who owns the 34 million pounds worth of equipment that will be funded by Vestasie?

45:40 We do, yeah. A short and positive answer. Now a slightly strategic question, someone wishing to play devil's advocate, some people might say that being a manufacturer of own brand or private label products is not consistent with being a contract manufacturer. Is there a danger of McBride becoming a jack of all trades and master of none? Which ends with an exclamation mark rather than a question mark.

46:15 Well, look, I think it's a great question, actually, and it's something that we've thought long and hard about. I think, look, I think against the backdrop of you know as I said regulation sustainability drives you know products you know have it gives us a bit of hedging I suppose for the midterm so if we see branded volumes recovering you know we would see growth in our branded supply to offset anything we saw negatively on private label and a bit the other way of course but look we're not the whole market so we will never be in like we're never moving exactly with the entire market we have different customers different different Thank you very much. and distracting on our mission to be a strong household player so we're trying to stick to the knitting in the sense of sticking into household so we're not we're not you know the jack of all trades is yes we're trying to cover the whole market but it's only the household market right a question on the uh no doubt sensitive subject of um price negotiations with customers and it is what alternatives do your clients have if they do not like the proposed price rise

47:43 well I think I mean yeah look it's it's always difficult you know and there's a scale of of ease of conversation which starts are difficult and moves to incredibly difficult so that that's just the nature of all negotiations um I think it's There are options, right? I mean, if it's really just a short term material hit, we would look to just recover in price through surcharge or through a short term supplement to the pricing that we've already agreed. I think the thing becomes longer term and pricing doesn't move. Robert Peter Ingelse, Robert Peter Ingelse, Lennard Markestein, Marielle Claudon, Helen Herd and the appetite of retailers to take price and move it on and also look I think the appetite for price rises from retailers in their own ranges of course because their own ranges we're always talking about here will depend a bit on what the branders do on their shelf pricing and you know we haven't seen much movement I would say up through June, July but we have started to see signals of some of those rise that makes the backdrop a bit easier potentially.

49:11 And I think a difficult question here to be precise on, but do you need to see further price inflation from this point before you have to raise prices again? And another way of looking at that is, is there a potential risk of a profitability lag such as the one that you have experienced in recent months?

49:38 Yes I think it's a really good observation that look I think the uncertainty you know is moving weekly and daily really I think and so we're trying to be agile we're trying to be fast moving with with information flows to our customers but yeah look I think we've said in our statement we will be going for further prices based on what we now hear around the conflict and how long that's going to last everyone's seen the oil price the oil price is not the main it's a barometer of I would say sentiment around around tensions in that region in particular and beyond, and therefore the impact onto trading sort of certainty. And whilst the oil price stays at the, you know, 100 to 110 range, we will have no choice but to go back with customers and we're already on that pathway.

50:26 OK, I'll try and make another link there from moving on from the crude price. We have a question. The rise in raw commodities like oil that affect your input cost is always well publicised. Can you say a little bit more about the from what you're hearing from your suppliers about the extent of the damage to production facilities and pipe networks in the Middle East that presumably will take months, if not years to repair? When and if the the Iranian situation gets concluded.

51:00 Yeah, that's a really good question, too. We've had varying, you know, we can read a lot about this, of course, in the in the chemical press, whatever, but it has been substantial, I think I saw an estimate between 50 and $70 billion of investment needed to recover to where it was before. That's before maybe some of these more recent attacks, I haven't seen a latest update on that. But it is substantial. And we're talking many years to recover. If they if even actually some of that investment goes to the Middle East for some Lennard Markestein, Marielle Claudon, but yeah it's big it's substantial but look you know since March we've seen I would say supply demand situations moving a bit all over you know we see more US material coming in we see people moving away from certain products and choosing others so you know it's a totally dynamic space as you would imagine and so you know we spend a lot of time and a lot of resource really trying to grill and analyze what we think is going to happen because that is that's our credibility in the face of customers helping them understand the direction this is going.

52:20 Thank you. A couple of questions. I won't call it the new McBride, but there has been a year or 15 months of substantial change. And we have a question here. You quite understandably reference in detail group and product progress against the Capital Markets Day targets. Given the significant change in group scale and structure since that event, are some of these targets in need of an update or being refractioned?

52:48 again very very good question and it is something we are considering uh internally as to when the right time is uh because our capital markets day you know was March 24 so we are considering uh whether we need to do a new capital markets day in the next 12 months or so good to hear uh What have we got here? Also a question around your increased scale. Has there been any change in the identity of your major clients, let's say the top five by volumes, or are you doing more with existing clients and that's where the growth is coming from?

53:36 No, look, I think... Lennard Markestein, Marielle Claudon, and we see you know ups and downs in in in those uh from time to time you know SKUs get moved around between uh between competition and us so no we're we're in good shape with a good raft of high quality customers um and it's relatively stable yeah And good. And another question again, on scale, I suppose. Are you comfortable that senior management is of sufficient scale and depth to cope with the increased burden of work and volume and profits that you've taken on?

54:32 Yes, I am. Another nice, short and sensible answer.

54:36 We have a very strong team and I'm very confident. Excellent. I think just time for a last one. It is early days since the Eurotab transaction closed, but have you found anything unexpected, either good or bad, since you've got under the bonnet? And can you just talk a little bit more about the cross-selling opportunities and also give some perspective about the scale of opportunity in the Turkish market itself?

55:12 do you want to talk about yeah I mean in in terms of the acquisition uh there is nothing there that we didn't know about so there's no surprises um I think that the team in Eurotabs is really really good um sometimes when you buy a business um the business being bought little bit begrudgingly having said that Eurotabs are absolutely not in that that uh they are hugely positive, they are really good and want to make this a success and we have welcomed them open arms into the McBride team so I've been really pleasantly surprised by their enthusiasm and their ability which is really positive.

55:58 and look on the cross-selling I suppose you know the Turkish market is is an interesting place it's a big economy of course it's new to us I think the existing ranges that Eurotab produce in Turkey for that market need updating that's one of the things we are working on already we will seed that market from our European operations in the short term to try to grow our presence across more than just auto dishwash with those customers and then as those volumes grow we would look to then invest in the right way into that into that location so yeah I think we've had good conversations already with some of the retailers I think they're quite encouraged by the fact that a private level expert has really taken on this business and yeah it'll take some time but we have some you know I don't the scale is not it's not going to be 10% of the group but it will be material to the Eurotab Turkey operations yeah.

56:47 Great, well I think a good positive note on which to end. I'd like to thank our audience for a very wide range of interesting questions. I would remind you if you could just hold on for one minute after this closes and complete the feedback form that would be appreciated and for those of you who want a bit more perspective about what this all means in terms of future forecasts I would recommend of course the equity development note by Caroline Gulliver which went out yesterday and retains a fair value of 265 pence for McBride's shares. They've had a very nice 61% rise in the last 12 months but perhaps there will a little bit more to go for and of course our thanks go to Chris and Mark for making the time to talk us through all of this and for being very very busy in recent months and I think a little holiday is deserved by at least one of you two someone else can mind the shop so thank you very much gentlemen thank you thank you all thank you