THE INVESTMENT COLUMN: Own-label success makes McBride a good safe bet

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The Independent Online
ALTHOUGH THE big guns of the fast-moving consumer goods world had their sights firmly trained on Unilever yesterday, interim results from the decidedly lower-key McBride did not go totally unnoticed.

The Buckinghamshire-based households goods group is behind the supermarket own-label products that are boring a hole in the bottom lines of just such companies as Unilever. McBride may shy away from the battle of the megabrands in dishwashing or air freshening, but all the while it is preparing an offensive on the shop floor.

It is the manufacturer behind supermarket own-label products such as Asda toothpaste, Tesco washing powder and Sainsbury's bleach. This position affords McBride some protection against the competitive onslaught from the likes of Proctor & Gamble that has caught Unilever on the hop, but it cannot shield the group from the ravages of a challenging trading environment.

Yesterday the group, which makes more than half its sales outside the UK, duly cautioned that it needed to increase prices to compensate for rising raw material costs while improving efficiency. It knows its customers, the mighty supermarkets, will not take kindly to paying more for own-label goods. Analysts took note and trimmed operating profit forecasts.

The 6 per cent increase in half-year profits to pounds 17.5m on sales also up 6 per cent at pounds 268m that McBride achieved suggests it is more than capable of squaring up to its customers. But the market, which marked the shares 7p lower at 160p, may need more convincing. On a forward p/e ratio of 11.4 times, the stock, which recently hit an all-time high, looks fairly valued.