McBride shares jump on European manufacturing contract, new facilities

McBride PLC on Friday hailed a "transformational business win", through a new contract with EH Group BV, known as Vestacy, the home care company behind brands such as Air Wick and Calgon.

Manchester, England-based private-label products manufacturer McBride has entered a tie-up with Schipol, Netherlands-based Vestacy which sees McBride taking ownership of two factories in Spain and Portugal for a "nominal" amount.

McBride will manufacture household goods - mainly laundry products, which it considers a key growth category - for Vestacy's European customers. It will split production volumes between the two new sites, and existing McBride facilities in Italy, France, Belgium, Poland and the UK.

The manufacturing contracts with Vestacy run for between five and eight years.

McBride stressed that it expects the arrangement to be "materially earnings accretive".

Once it reaches maturity, and when combined with other contracts signed in parallel, the company sees this agreement generating annualised revenues of £170 million in the second half of financial 2028, at which point it also expects net debt to rise by up to £25 million, at peak. Investment will be incremental, funded from existing facilities and operational cash flow.

McBride sees the proportion of contract manufacturing in total revenue beating its previous target of 25%, while profit margins are expected to remain steady.

The transfer of the new facilities is targeted to complete early 2027, and the expanded capacity to be fully operational by early 2028.

Chief Executive of McBride Chris Smith commented: "For the board, a partnership of this scale with a global brand owner is further validation of the embedded value within the group. Securing these two manufacturing sites for a nominal consideration, underpinned by long-term, highly visible contract manufacturing agreements, enables us to further expand our European operational footprint while accelerating our growth targets within the key laundry category."

McBride shares jumped 20% to 200.21 pence each on Friday afternoon in London.

The brands were part of Reckitt Benckiser Group PLC's Essential Home division, sold to Advent International at the end of last year.

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