Glasgow packaging heavyweight Macfarlane targets further acquisitions after solid rise in sales and profits

Macfarlane Group, the Glasgow-headquartered packaging provider with some 1,000 staff, is targetting fresh acquisitions and further growth after overcoming inflationary pressures to report a hike in annual sales, profits and dividend.

New chair Aleen Gulvanessian said that despite headwinds including rising operating costs and higher interest rates the group expected to deliver further growth in 2023. Newly released results for 2022 reveal that revenue from continuing operations rose 10 per cent to just over £290.4 million. Profit before tax was up 7 per cent year on year to £19.9m while the board is proposing a final dividend of 2.52p per share, amounting to a full-year pay-out of 3.42p, also an increase of 7 per cent.

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. It supplies some 20,000 customers, mainly in the UK and Europe, and operates via two divisions - packaging distribution and manufacturing operations.

Chief executive Peter Atkinson said the firm, which this year marks its 50th anniversary on the London stock exchange, had a track record of completing two acquisitions a year, though that strategy had been put on hold during the pandemic. “We are very confident that we will complete another couple of acquisitions in 2023,” he said. “We have a very strong pipeline.”

He noted that the industrial markets that the firm serves were beginning to recover and also highlighted “significant” investment in a number of areas including distribution and innovation centres and IT provision. Atkinson said the group had “a really good record” of managing environmental issues and switching customers to greener products.

Gulvanessian, who took over as chair in October from Stuart Paterson, who served nine years on the board, said: “Our performance in 2022 was achieved against a background of a marked slowdown in spend from the e-commerce sector, following strong growth during the 2021 Covid-19 lockdown periods, and inflationary pressures on operating costs. We anticipate that 2023 will be another challenging year with uncertainty over the impact of the increase in the cost of living on customer demand, rising operating costs, particularly related to labour and energy, and increasing interest costs. Despite these challenges, with the effectiveness of our strategy, the resilience of our business model and the experience and commitment of our people, we expect Macfarlane Group to continue to deliver further growth in 2023.”

Atkinson added: “The year has started well and we expect it to be another period of growth. We have done a good job over ten years of managing input price inflation and working that through with customers.”

Analysts at house brokerage Shore Capital noted: “The short-term outlook for e-commerce continues to remain challenging due to the cost-of-living crisis with volumes likely remaining stable for the next couple of years. However, management still believes e-commerce is a long-term growth market for the group reflecting underlying secular trends. Industrial markets (i.e. aerospace, defence, scientific instruments and medical) are continuing to recover (higher margin) and leave the group well positioned, despite the macro-economic challenges.”