Glasgow packaging group Macfarlane poised for further growth despite inflation woes after profits leap

Macfarlane Group, the Glasgow-headquartered protective packaging provider, has reported a strong full-year performance and flagged further progress in 2022 despite inflationary pressures.

Sales from continuing operations grew by 26 per cent year on year to £264.5 million while pre-tax profits jumped 50 per cent to almost £18.7m.

Bosses said the business had benefited from an “ongoing structural shift to e-commerce retail”, the recovery in certain industrial sectors which had been affected by the pandemic in 2020 and the recent acquisitions of GWP and Carters Packaging.

Chief executive Peter Atkinson said the firm had a “well developed acquisition pipeline” with further deals expected to be sealed in 2022.

Headquartered in Glasgow, Macfarlane Group employs more than 900 people at 36 sites, principally in the UK, as well as in Ireland and the Netherlands.

Packaging distribution grew sales through strong demand from existing customers in the e-commerce retail and medical sectors and the recovery in a number of industrial sectors. However, demand from the aerospace, high street retail and hospitality sectors has not yet recovered to pre-pandemic levels, the firm noted.

Manufacturing operations benefited from the acquisition of GWP, a protective packaging manufacturing and distribution business based in Wiltshire, which is said to be performing ahead of expectations, and a strong recovery in the packaging design and manufacture business, which returned to profit following restructuring actions undertaken in the second half of 2020.

The group sold its labels business at the end of last year to the Reflex Group, a privately owned UK company focused on the manufacture of labels and flexible packaging.

The board is proposing a final dividend of 2.33p per share, resulting in a full-year dividend of 3.20p, compared to the prior year dividend of 2.55p per share.

Looking to the current financial period, bosses noted: “We anticipate that 2022 will see ongoing inflationary pressure on input prices, continuing supply constraints on most raw materials and operating costs increasing due to staffing pressures.

“However, despite these challenges, trading in the early months has been encouraging and the board is confident that, given the effectiveness of our strategy, the resilience of our business model and the experience and commitment of our people, Macfarlane Group will continue to deliver further growth in 2022,” they added.

Atkinson said current volatility with global oil prices was a concern given its impact on polymer costs but stressed the business had mitigations in place.

Headquartered in Glasgow, the group employs more than 900 people at 36 sites, principally in the UK, as well as in Ireland and the Netherlands.

Analysts at house brokerage Shore Capital said the firm had published “an excellent set of results”.

They noted: “ The outlook continues to present challenges for the packaging industry, noting industry-wide cost inflation. However, Macfarlane’s proven, focused, integrated and resilient business model, with market-leading positions in value-added and specialist solutions, heralds continuing profitable growth. We upgrade our forecasts accordingly.

“In our view, the group has a solid operating platform with a strong balance sheet backing organic and acquisitive growth.”

The group also paid tribute to its founder, Lord Macfarlane of Bearsden, who died in November last year.

“Lord Macfarlane was the driving force in building the Macfarlane Group between 1949 and 1999 when, as chairman, he retired from the board. Since then, he was a constant supportive presence and he is greatly missed,” the firm said.

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