Macfarlane wraps up profits increase
● Glasgow group unveils 40 per cent profit jump and two acquisitions
Packaging specialist Macfarlane Group has unveiled two acquisitions in recent weeks alongside “strong” interim results, including a jump in pre-tax profits of almost 40 per cent.
However, the Glasgowbased business, whose activities include providing packaging for online deliveries for the likes of Lakeland and QVC, ruled out further deals until 2019 as it approaches the final quarter, its busiest period of the year.
The Glasgow-based group unveiled a 14 per cent yearon-year jump in group turnover to £102.7 million in the six months to 30 June, and a 39 per cent jump in pre-tax profit to £3.5m. The board recommends an interim dividend increase of 8 per cent to 65 pence per share.
Chief executive Peter Atkinson told The Scotsman that it was “clearly a good first half of the year” for the group, with sales growth generated by a mixture of organic and the benefits of prior-year acquisitions, with Greenwoods Stock Boxes purchased in 2017 and “performing really well”.
0 Atkinson said it was “clearly a good first half of the year” for the group
CEO PETER ATKINSON
Packaging distribution grew its sales by 14 per cent in the period, with 5 per cent achieved from organic growth and the remainder from the 2017 purchase of Greenwoods.
Atkinson said organic growth came mainly from the industrial sector, where it has seen a notable increase in its client base “complemented by the continuing importance of our ecommerce business as we as consumers spend more money on the web and the need for packaging to deliver goods”.
The firm unveiled its recent conclusion of the acquisitions of Tyler Packaging (Leicester) and Harrisons Packaging, packaging distributors based in Leicester and Leyland respectively. Macfarlane said the maximum net cash consideration including deferred payments for both acquisitions is estimated at £3.5m.
“Both these acquisitions fill the profile that we’ve identified as the types of target companies that we’d like to buy,” said Atkinson, adding that while it is very early days, the indicators are “certainly very positive” for both.
It comes as chairman Stuart Paterson outlined the group’s strategy “to deliver sustainable profit growth by focusing on added-value products and services in our target market sectors, combined with the execution of value-enhancing acquisitions”.
But Atkinson expected its next series of announcements in 2019. “We’ve got a strong pipeline of acquisition opportunities that we’re working on and we’re very hopeful that we will make further announcements during 2019 on additional acquisitions.”
Also in focus by both Atkinson and finance director John Love was the reduction in the group’s net debt to £11.1m at 30 June, a £3.6m drop from six months previously, and it operating “well within” its existing bank facility of £30, with Love noting extra “firepower” for 2019 acquisitions.
Paterson added that the group expects to be highly cash generative from trading in the second half. “Macfarlane Group’s performance in the first half of 2018 reflects the successful implementation of our strategy and we are confident that the Group will continue to make further progress in the remainder of 2018.”
Macfarlane shares closed up 3.9 per cent at 106p.
“Both these acquisitions fill the profile that we’ve identified as the types of target companies that we’d like to buy”