Glasgow's Macfarlane Group seals multi-million-pound sale of business employing 109 workers
The group has sold its Macfarlane Labels division, which designs and prints self-adhesive and resealable labels, for £6.4 million to the Reflex Group. The deal includes subsidiaries Macfarlane Group Ireland (Labels & Packaging) and Macfarlane Group Sweden.
Privately owned Reflex is focused on the manufacture of labels and flexible packaging, with revenues of £135m and more than 800 employees, primarily in the UK.
For the year ended December 31, 2020, Macfarlane Labels generated profit before tax of £300,000, and as of the end of 2020 had gross assets of £15.1m. The labels business employs 109 people who will transfer to the new owner.
Bosses at Macfarlane said the proceeds from the sale would be “strategically invested” in the continuing growth of the group’s protective packaging businesses.
Chief executive Peter Atkinson said: “Macfarlane Labels has been a long-standing part of the group. We believe that its sale to Reflex, with their well-established position and scale in the labels market, creates the best opportunity for Macfarlane Labels to develop.
“The sale will allow the group to focus resources on growing our protective packaging businesses both in the UK and Europe.”
Analysts at house brokerage Shore Capital noted: “The labels sale leaves Macfarlane focused on its ‘buy & build’ model in protective packaging solutions, working closely with its clients in the UK and growing into Continental Europe.
“We expect the sales proceeds to be utilised by the group (backed by the debt facility) in coming quarters in the organic and acquisitive growth strategy - while operating conditions continue to normalise from the pandemic.
“We believe that Macfarlane is well placed to deliver growth over and above our current forecasts.”
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.
In November, bosses flagged robust trading in the face of “continuing challenging market conditions”.
In a trading update to investors, the firm said it expected to exceed its previous expectations for the full year.
Sales revenue grew by 25 per cent in the year and group profit before tax was said to be “well ahead” of the corresponding period in 2020. Bosses also highlighted the benefits from two acquisitions made in 2021.
The firm said at the time: “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.
“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.”
Results for the six months to the end of June, published in August, revealed turnover of £133.5m, an increase of 26.5 per cent on a year earlier.
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