Macfarlane declares it is on track in spite of ‘adverse’ conditions
MACFARLANE Group has declared that it expects its results for 2022 to exceed its performance last year – despite ongoing pressure on costs.
The Glasgow-based firm, which provides packaging solutions to companies such as Dunelm, Lakeland, Halfords, Moonpig, Lloyds Pharmacy and Parsley Box, reported yesterday that sales revenue in the year to date was running 11 per cent ahead of the same period in 2021.
The company, which employs more than 1,000 people at 37 sites, said weaker volumes have been offset by “effective management of input price increases”, adding that it was taking actions to improve productivity and streamline its operating footprint.
The update came after Macfarlane warned in August that it was facing sustained pressure on utility, raw material costs and was anticipating slower demand from e-commerce customers in the second half of the year, though reported at the time that it still expected to meet profit expectations for the full year.
Macfarlane, which was established as a commercial stationery company by the late Lord Macfarlane of Bearsden in 1949, made a pre-tax profit of £18.7 million on revenue of £264.5m in the year ended December 31, 2021.
House broker Shore Capital said yesterday that it had retained its forecasts for 2022, guiding on profits of £22.7m on revenue £284.4m for the full year.
Macfarlane chairman Aleen Gulvanessian, who recently succeeded Stuart Paterson, said: “Given the wellpublicised adverse market conditions we are pleased with the performance of the Group so far in 2022 and confident in meeting our profit expectations for the year.
“Whilst challenges will continue to persist, with the experience of our management team, resilience of our business model and strong acquisition pipeline, we are well placed to maintain the Group’s positive progress.”
Yesterday, the company highlighted that it was making progress on its European expansion plans following the acquisition of German company Packmann for £8.625m in May, noting previously that the deal had “raised the profile of Macfarlane in Europe”.
Macfarlane, which has routinely used acquisitions to drive growth since Peter Atkinson became chief executive in 2003, also added Carters Packaging in England to its stable in March 2021.
Mr Atkinson said when asked by The Herald about the acquisition strategy in August: “The pipeline of acquisitions that we have both in the UK and in Europe is stronger than it has ever been. There is certainly an appetite for people to look to sell their businesses and mainly for genuine reasons – retirement tends to be the major force for people looking to sell.”
Macfarlane noted yesterday that net bank debt stood at £5m at October 31, compared with £9.7m at June 30.
Analyst Shore Capital said yesterday that Macfarlane had “published a strong trading update for the period since [the] end [of] June to [the] end [of] October, building on a robust set if interim results in August, confirming that it expects the group’s results for 2022 to be ahead of last year and in line with its full-year expectations.
“We retain our FY22 forecasts accordingly, ahead of an expected trading update for the full year in January.”
The broker added: “The shares trade on an unjustified discount to peers with similar financial and operational qualities across the general industrial space.”
Shares closed up 0.5p at 103p.
We are confident about meeting our profit expectations for the year