Shares of the consumer products company McPherson’s Limited (ASX:MCP) have plummeted on Friday after the company released a profit guidance update late on Thursday. The company said it in report that it expects pre-tax profit for the year to 30 June 2015 to be between 20 and 30 per cent lower than FY2014 profits. The company had previously noted a strong second-half performance in a February report. However, the company has since faced significant headwinds.
McPherson’s said weaker consumer demand in some sectors was unanticipated. There was a significant delay in the acceptance of price increases by some customers, although the price adjustments are now in place. The new pricing arrangements and the subsequent negotiations with customers took more time than previously anticipated. Both commodity prices and AUD/USD exchange rate were cited as the cause of the new pricing arrangements. The report said there was increased promotional expenditure in key accounts in the last quarter. Additionally, there was a delay in re-establishing the Australian distribution of some key fine fragrance brands.
The company also noted that the appointment of a new chief executive might combat weakness in its Home Applications division. McPherson’s also faced costs in New Zealand after reshaping its businesses in the country. The company said it expects better performance in FY2016 due to the appointment of a new divisional manager for its New Zealand operations. Shares of MCP have fallen 15c, or 16.04 per cent, at 78.5c per share around 3:17pm on Friday. MCP has fallen 32.04 per cent in the last 12 months and 36.69 per cent so far this year.