McBride (LSE:MCB) has entered into a strategic partnership with home care group Vestacy that includes long-term contract manufacturing agreements covering a range of household products, primarily in the laundry category.

As part of the agreement, McBride will acquire two Vestacy manufacturing facilities in Spain and Portugal for a nominal consideration.

The two sites will join McBride’s existing manufacturing network, which includes facilities in Belgium, Italy, Poland, the UK and France. The company plans to use the expanded network to allocate production volumes across locations and serve European markets.

Agreement expected to increase group revenue by around 15%

McBride expects the additional contract manufacturing business to increase group revenue by approximately 15%.

The company forecasts annualised revenue of around £170 million from the new business by the second half of FY28, with profit margins expected to be in line with its current levels.

The agreement will also increase contract manufacturing’s contribution to McBride’s business beyond the group’s existing 25% target.

Vestacy to fund around £34 million of equipment

Under the agreement, Vestacy will fund approximately £34 million of equipment over a two-year period.

McBride expects to invest around £17 million in transition costs, project expenditure and specific capital expenditure associated with the partnership.

The company expects the investment and capacity expansion to result in a modest increase in net debt.

Factory transfers expected to complete in early 2027

Implementation of the partnership will take place in multiple phases.

McBride expects the transfer of the Spanish and Portuguese manufacturing facilities to be completed in early 2027, with the expanded operations scheduled to reach full capacity by early 2028.

The contract manufacturing arrangements will include quarterly pricing mechanisms, which the company said are typical for this type of agreement.

McBride expands European contract manufacturing operations

Management said the Vestacy agreement supports McBride’s strategic and financial objectives and expands its contract manufacturing activities with brand owners.

McBride plc manufactures private-label and contract-manufactured products for domestic household, professional cleaning and hygiene markets across Europe.

The group primarily operates in household and laundry categories, supplying retailers and brand owners through its European manufacturing network.