The Scotsman

Profits hit mark at Glasgow packaging group Macfarlane

● Chief executive highlights contributi­on from acquisitio­ns and solid organic sales

- By GARETH MACKIE

Packaging and distributi­on specialist Macfarlane Group is on the hunt for more acquisitio­ns after revealing a surge in first-half profits.

The Glasgow-based firm said pre-tax profits for the six months to the end of June jumped 26.6 per cent to £2.5 million, as recent takeovers and strong demand from customers in the online retailing sector helped sales grow 10.2 per cent to £89.8m.

Following the boost to earnings, shareholde­rs will receive a 9.1 per cent hike in their interim dividend to 0.6p a share, to be paid on 12 October.

Chief executive Peter Atkinson told The Scotsman: “This is a continuati­on of the strategy we embarked upon around seven years ago, which was about organic growth driven mainly through the e-commerce sector, supplement­ed by selective high-quality acquisitio­ns.”

The group has made six takepackag­ing overs since 2014, including last year’s purchase of the packaging arm of fellow Glasgow business Edward Mcneil, and Atkinson said it has a “very strong pipeline” of further opportunit­ies.

He added: “We are very hopeful that we will complete another acquisitio­n in 2017. We’re looking for high-quality businesses within the packaging distributi­on area to give us improved geographic coverage, or improved penetratio­n into particular customer sectors, or businesses that allow us to strengthen our current franchise in a particular geography.”

Atkinson said that Macfarlane, which employs about 800 people, has “pretty good coverage” across the UK, but is “probably slightly under-represente­d” in Scotland, where its workforce stands at about 120.

“The focus is on finding the right quality businesses, more so than the geographic piece,” he added. “But if there was an opportunit­y in Scotland, we would obviously consider that.”

distributi­on sales were up 12 per cent on a year earlier, helped by its string of recent deals, with operating profits rising 18 per cent to £2.7m.

Although sales at its manufactur­ing operations dipped 1 per cent, operating profits climbed 29 per cent to £300,000 as the group continues to focus on higher-margin products such as resealable labels.

Looking ahead to the second half, Atkinson said: “The final quarter of the year is a very busy period for our customers. Because of the volatility in the way e-commerce works and customers’ variety of choices, retailers depend on someone like Macfarlane to give them that flexibilit­y of supply.”

Macfarlane chairman Graeme Bissett added: “The strong performanc­e in the first six months, supplement­ed by the expected seasonal uplift from the e-commerce sector in the second half of the year, gives the board confidence that its full-year expectatio­ns for 2017 will be achieved.” He said the process to appoint his successor was “well advanced”.

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