The business – which floated on the London Stock Exchange in 1973 – saw sales reach £225.4 million in 2019, marking a 4 per cent year-on-year jump, with pre-tax profit growing by a tenth to £12m. The board proposes a final dividend of 1.76 pence per share, amounting to a full year dividend of 2.45 pence, a 7 per cent year-on-year increase.
“The performance in 2019 was in line with market expectations and was achieved against a well-publicised backdrop of economic uncertainty resulting in weaker demand,” said the company, which started out in 1949 as a commercial stationer on Bath Street.
Its packaging distribution arm grew sales by 4 per cent to £196.7m. Sales revenue from existing customers was hit by weaker demand and sales price deflation last year but this was offset by good growth in new business and the benefit of £5.7m from acquisitions, said the group.
In 2019 it acquired Ecopac (UK) and Leyland Packaging Company (Lancs) – saying have both performed well since their arrival. Sales in manufacturing operations reached £28.7m, up by 4 per cent – while the group’s pension deficit at 31 December fell by £3.3m to £6.5m.
Chairman Stuart Paterson said: “Continued profit growth over a ten-year period confirms the board’s confidence that its consistent strategy of positioning the business to serve key growth markets in the protective packaging sector remains appropriate and continues to be effective. 2020 has started well and profitability in the year to date is ahead of the same period in 2019.
“The business will remain focused on the delivery of continued profit growth through the provision for our customers of added-value protective packaging products and services in target market sectors, combined with efficiency improvements and the completion of value-enhancing acquisitions… we are confident that the group will deliver further progress in 2020.”
Andrew Simms, analyst at house broker Arden, said: “Macfarlane has reported 2019 results in line with our forecasts, despite tough end markets, with a robust outlook for 2020. In our view, the current share price does not reflect the consistent characteristics of the business.
“We believe the results and outlook are an endorsement of strategy and the stock should trade comfortably above current levels.”