Glasgow packaging group Macfarlane gives profit assurance and flags fresh acquisition

Macfarlane Group, the Glasgow-headquartered packaging provider with more than 1,000 staff, remains on track to hit annual profit forecasts in excess of £20 million despite warning of a “challenging” second half.

Unveiling a double-digit hike in first-half profits, the firm also noted that its recent acquisitions were performing well, while it continued to make good progress in Europe. Chief executive Peter Atkinson said the takeover of Germany’s PackMann in May 2022 and the purchase of Gottlieb, based in the north-west of England, in April of this year were “if anything, performing better than expectations”. He added: “We have a strong acquisition pipeline and we would be very hopeful that we can complete another acquisition before the year end. We have a sweet spot in terms of the size of any deal that works for us and doesn’t stretch our management bandwidth too wide.”

The results for the six months to the end of June show that profit before tax jumped by 13 per cent to almost £10m, compared with a year earlier. Revenues nudged 2 per cent higher to £141.6m. An interim dividend of 0.94p per share was declared, an increase of 4 per cent on the year before.

Chair Aleen Gulvanessian said: “The group has demonstrated resilience in the first half of 2023, against the backdrop of a slowdown in customer demand. The inflationary impact of operating cost increases has been offset by effective input price management. Whilst we expect the second half of 2023 to remain challenging, our good progress in Europe, diverse customer base, strong new business momentum and effective management of pricing and costs mean that our profit expectations for the full year remain unchanged.”

Headquartered in Glasgow, Macfarlane Group employs more than 1,000 people at 37 sites, principally in the UK, as well as in Ireland, Germany and the Netherlands.

Within the group’s core packaging distribution business, a good contribution from the acquisitions of PackMann and Gottlieb, combined with organic growth in Europe and new business wins, is said to have offset lower demand from customers in the UK and Ireland. Packaging distribution grew revenue by some £400,000 to £124m. The firm’s smaller manufacturing division grew revenues by 13 per cent to £17.7m.

Headquartered in Glasgow, Macfarlane employs more than 1,000 people at 37 sites, principally in the UK, as well as in Ireland, Germany and the Netherlands. The group supplies more than 20,000 customers.

Analysts at house brokerage Shore Capital noted: “The weaker market conditions seen in the UK and Ireland are not unexpected and are being experienced across the packaging sector, as evidenced by recent announcements from other such companies in the public arena. Macfarlane is set apart from the ‘pack’, in our view, by its specialisation in the protective segment and the attractive economic returns generated by the group’s business model.”

Shore Capital is projecting a full-year, adjusted pre-tax profit figure of around £24.9m. Analysts at Investec have pencilled in a normalised profit before tax haul in the region of £21.1m for 2023. Investec noted: “Macfarlane demonstrated resilience in the first half of 2023, against the backdrop of a slowdown in customer demand. The inflationary impact of operating cost increases has been offset by effective input price management.”