Glasgow packaging firm Macfarlane scraps divi but expects to make profit in 2020
Chairman Stuart Paterson said at the firm’s annual general meeting (AGM) in Glasgow yesterday that due to government actions to address the Covid-19 crisis, it expects demand levels in the second quarter to reduce to between 75 per cent and 80 per cent of those seen in the same quarter of 2019.
“We would expect the second quarter to be a profitable period of trading albeit well below that achieved in the first quarter,” he said.
Additionally, the board decided not to propose the 2019 final dividend at the AGM, which will reduce cash outflows by £2.8 million in the second quarter.
“Once trading has recovered in line with more normal levels and we have more clarity about the longer-term outlook, the board’s intention is to recommence dividend payments,” Paterson said.
He also reiterated the group’s previous announcement that the first quarter of 2020 delivered a “strong” trading performance with group sales growth of 2 per cent and profitability “well ahead” of the same period in 2019. Acquisitions made in 2019 both performed to expectations in this period, he added.
The business has, following the introduction of lockdown, seen customers in the hygiene, household essentials, medical and food sectors continue to demonstrate strong demand.
But some sectors it serves, such as automotive, aerospace and certain retail segments, “have been materially impacted by the lockdown and their business has reduced significantly as a result”.
The chairman also stated: “We expect the business to remain profitable in 2020.”
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