Macfarlane says rising profits are in the bag as it packs off 50 more staff

Published on Monday 17 November 2008 21:01

MACFARLANE Group yesterday predicted it was on track to increase profits this year after cutting about 50 jobs as demand for its products has reduced.

The Glasgow-based packaging group, which is expected to report sales of about 130 million this year, revealed that it had taken pre-emptive cost-cutting measures.

Chief executive Peter Atkinson said that since the start of the second half of the year, Macfarlane had reduced head count by about 50 from the group's packaging distribution business.

The business operates from 18 sites across the UK, one of which is in Scotland. The job losses are spread across most of the sites.

Only about 15 staff were made redundant, with the remaining reduction coming from not replacing departures and "performance related issues".

News that the company was on track to increase profits this year sent shares in Macfarlane up 3p or 20.7 per cent to 17.5p. Brokers forecast the company would make a pre-tax profit of about 3.8m in 2008, a big rise on the 2.5m in 2007.

Atkinson warned that the company was seeing a fall in demand for its products, which is forecast to continue into 2009.

"Demand is certainly weakening and we're not immune to that," he said.

"Our view is that it's likely to get worse – we're not expecting that going into 2009 we'll see a recovery."

Demand from home removal companies had declined sharply this year, he said, while automotive clients had indicated in recent months that their demand had fallen and was expected to fall further.

But sales to online retailers and repackaging companies – which import goods in bulk before repackaging them for sale in the UK – were "holding up".

Atkinson said Glasgow-based Macfarlane was currently looking at ways to cut costs further.

"We've done a lot of work on costs over the last few years so we would regard ourselves as relatively lean, but it would be crazy of me to say there's not more work to be done," he said.

"In times like these it is a case of matching your cost base with your likely revenue line."