LONDON (ShareCast) - Private label household goods manufacturer McBride is cutting 400 jobs as part of a shake-up in response to weak UK retail trading.

McBride, which makes detergents and other products for UK supermarkets, said it would remove un-profitable business and reduce capacity in the UK to improve profit.

It expects to save about £12m by June 2016 with around £3m benefitting the 2015 financial year, while costs of the shake-up are set to be about £14m.

"Regrettably, it is expected that, of a workforce of 1,600 in the UK business, around 400 positions are expected to be made redundant. Consultation with affected employee groups will start immediately," the group said.

As a consequence of the review, the board expects to impair the value of assets in the UK by £21m, including £6m of goodwill, in the current financial year.

McBride forecast adjusted operating profit and net debt for the year in the year to June 30th in line with its expectations.

Group full-year revenue on a constant currency basis is expected to fall 3% as previously announced.

Private label revenue was flat with continued growth in our France and Benelux, Poland and Germany businesses, the latter driven by significant new business wins, offset by the effects of the weak retail environment in the UK and Italy and continued increased branded promotional activity.

Contract revenue fell a fifth as expected due to the wind-down of certain contracts.

McBride said it expected to incur one-off costs of about £4m for implementing the European classification, labelling and packaging regulations, which require it to change the labelling of almost all its products.

The group is also facing an exceptional charge of £2.5m in relation to a long term environmental remediation plan at a site in Belgium.

In 2015, underlying growth in group revenue of 2% is expected, although this will be offset by exiting un-profitable business as part of the UK re-structuring.

Total exceptional charges will amount to around £37m in 2014 and £7m in 2015, including the impairment noted above and final costs linked to existing cost-cuts.

Chief Executive Chris Bull said: "We are announcing a robust plan that will help restore our UK profitability. We will exit some business in non-core un-profitable categories, but our capacity to meet growth opportunities in our core categories remains unaffected."

PW

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