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Leading cleaning products maker becomes latest company to count cost of supply shortages

Written by on 19/08/2021

A leading cleaning products maker has warned of a profits slump as it counts the cost of higher raw material costs and HGV driver shortages.

UK-based McBride, which makes own-label goods from detergents to dishwasher tablets on behalf of retailers, said it was starting to see “distribution challenges” – particularly in the UK and Germany.

Shares fell 17%.

It is the latest company to be hit by supply chain struggles after peri-peri chicken chain Nando’s this week shut 45 restaurants.

A sign on the doors of a branch of Nando's in White City, Manchester, telling customers that the store is closed. The chain has had to temporarily close around 50 of its restaurants nationwide after running out of peri-peri chicken. Picture date: Wednesday August 18, 2021.
Image: Nando’s has also been hit by supply chain shortages

Elsewhere on Thursday, results from paving specialists Marshalls revealed that it was facing similar cost pressures, though also highlighted buoyant demand from consumers stuck at home.

McBride told investors that raw material problems it had disclosed earlier this year remained “extremely challenging”.

“More recently, and in line with the general trading environment experienced by others, the group has also started to experience distribution challenges, particularly in the UK and Germany as a result of the shortage of heavy goods vehicle drivers,” the company added.

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This had “impacted upon both transport availability and cost”, McBride said.

It has agreed price increases with customers but these will take place later than it had targeted.

The costs will wipe out earnings for the first half of financial year and McBride now expects headline profits for the year to the end of next June to be up to 65% lower than in 2020-21.

HGV
Image: The UK haulage industry says there is a shortage of 100,000 drivers

Meanwhile, landscape products group Marshalls said that “raw material costs across the construction sector and reduced numbers of HGV drivers within the third party haulage market are causing costs to increase which we are recovering successfully through price increases”.

It said demand had been boosted by consumers who had more money to spend due to lower spending on commuting and holidays.

Sales of £298m and profits of £39m for the first half of the year were back above pre-pandemic levels in 2019 and Marshalls says it was raising its expectations for annual results in 2021 and 2022.

Supply chains worldwide have been struggling as demand revives sharply in the wake of the coronavirus pandemic.

In Britain, the so-called “pingdemic” forcing workers to isolate at home has been a factor.

Separately, the UK haulage industry says it is facing a shortage of 1000,000 HGV drivers – blamed both on the impact of the pandemic and Brexit.

Elsewhere, worker shortages in the poultry sector have been attributed by the industry to the reduced availability of workers in the wake of Brexit.

 Sky News

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