Glasgow's Macfarlane Group battles tough conditions to top profit projections

Macfarlane Group, the Glasgow-headquartered protective packaging provider, has flagged robust trading in the face of “continuing challenging market conditions”.

In a trading update to investors, the firm said it now expects to exceed its previous expectations for the full year.

Sales revenue has grown by 25 per cent in the year to date and group profit before tax is said to be “well ahead” of the corresponding period in 2020. Bosses also highlighted the benefits from two acquisitions made in 2021.

The firm added: “We expect the remainder of 2021 to remain challenging with input price inflation, supply constraints on certain raw materials and increased operating costs due to staffing pressures.

Headquartered in Glasgow, Macfarlane Group employs more than 1,000 people at 39 sites, principally in the UK, as well as in Ireland, Sweden, and the Netherlands.

“Some customers are also experiencing supply chain issues which are affecting their demand for packaging. However, the group’s management team remains focused on effectively managing these challenges.”

Chairman Stuart Paterson added: “The Macfarlane Group performance has been robust in demanding market conditions and is testament to the strength of our business model and the diligence of our people.

“At the interim results we indicated that we expected headwinds in the second half of 2021, so it is particularly pleasing to be once again raising our expectations for the full year.”

Analysts at house brokerage Shore Capital noted: “Momentum remains with Macfarlane and the sector, in our view, reflecting the ongoing structural shift to ‘online’ and recovery in industrial markets post-pandemic.

“Noting its solid platform for growth, the outlook and long-term opportunity in protective packaging solutions looks bright to us,” they added.

Results for the six months to the end of June, published in August, revealed turnover of £133.5 million, an increase of 26.5 per cent on a year earlier. Operating profit before amortisation and impairment at £11.1m and profit before tax at £7.8m both more than doubled, year on year.

Macfarlane pointed out that this also marked a 24.2 per cent increase in sales and a doubling of profit before tax compared to the same period in 2019, prior to any impact from the pandemic.

Meanwhile, the interim dividend was increased by 24.3 per cent to 0.87p per share.

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