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McBride invests in skin care manufacturer in Czech Republic

By Katie Bird , 08-Sep-2010

Private label manufacturer McBride has acquired a majority stake in Czech manufacturer Dermacol, expanding its position in the skin care market.

The UK-headquartered company currently focuses on the personal care and household care markets and has highlighted skin care as a future growth opportunity.

Increase foothold in skin care

As a manufacturer of products such as face creams, skin cleansers, sun care products and body lotions, the acquisition of Dermacol will give McBride a stronger foothold in the sector and help complete its portfolio of private label products.

Chief executive of McBride, Chris Bull, confirmed the move opened up the company’s offering to customers.

“It is consistent with our stated corporate strategy and provides McBride with a full range of products to create private label skin care ranges for our customers,” he said.

Although the company is based in the Czech Republic with its manufacturing facility in Brno, the consequences of the acquisition will not be limited to the Central and Eastern European region.

“The Dermaco business will provide a European centre of excellence for these products enabling us to bring rapid innovation to our Personal Care ranges across Europe,” the company said in its recent financial results statement.

According to McBride, the factory is modern with significant capacity for expansion and meets ISO 9001 and GMP standards required by customers.

With a primary investment of 70 per cent in Dermacol, the company said it plans to purchase the remaining 30 per cent in late 2017 depending on Dermacol’s operating profit in that year.

McBride has said it will be paying CZK240m (approximately €9.7m) for the first 70 per cent of the shares which it will hand over in instalments, some contingent on Dermacol’s results.

For the year ending 2009, Dermacol reported profit before tax of CZK24m.

Currently Dermacol manufacturers half its products as own brand which it sells to Alphaduct, and half as private label for supermarkets and pharmacy chains.

Alphaduct has agreed to purchase a minimum volume of products until 2018.

Annual results

The company’s acquisition announcement came on the same day as the publication of the yearly results, with McBride’s sales up 2.5 per cent reaching ₤812.2m (€ 988.6m) compared to last year’s ₤792.4m.

Operating profit, pre exceptional items stood at ₤48.0m compared to ₤34.5m in 2009.

After profiting significantly from the trading down experienced during the economic downturn, private label suffered slightly during 2010.

In the UK, heavy discounting from brands led to dip in the middle of the year for private label. In France, while private label demand in heavy discount stores fell, it remained strong in supermarkets, leaving sales slightly down on last year, according to McBride.

However, the company remains convinced that consumers are in general still price conscious.

“There is no doubt that in the current economic climate consumers are more value conscious then ever and the environment therefore continues to remain positive for private label growth,” the company said.