Macfarlane eyes more deals following jump in profits

Packaging and distribution group Macfarlane today said it was on hunt for more acquisition opportunities as it unveiled its seventh consecutive year of profit growth.

Macfarlane saw its annual profits drive up 15%. Picture: Contributed

The firm, which last year took over the packaging business of fellow Glasgow-based company Edward McNeil in a £1.7 million deal and acquired Colton Packaging Teesside for up to £1.3m, told investors that it remained hungry for further deals.

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Chairman Graeme Bissett said: “We will continue to focus on opportunities in sectors with strong growth prospects, including internet retail, third-party logistics and national accounts.

“We will also maintain our programme of acquiring good quality businesses to augment organic growth.”

His comments came as Macfarlane posted a pre-tax profit of £7.8m for 2016, up 15 per cent from the £6.8m figure reported for the previous year, on turnover 6 per cent higher at £179.8m.

A final dividend of 1.4p a share was proposed, to be paid on 8 June subject to shareholder approval, lifting the full-year payout by 7 per cent to 1.95p.

Macfarlane said sales at its manufacturing arm were down 9 per cent on 2015 at £23.9m as it ended work with lower-margin customers to focus on higher-value products. Profits dipped to £900,000, from £1m a year earlier.

Sales at its packaging distribution operation grew by 9 per cent to £155.9m, with organic growth recovering following a “challenging” start to the year. Helped by recent acquisitions, overall operating profits at the division jumped 16 per cent to £7.8m.

The string of takeover has seen Macfarlane’s net bank borrowing rise to £15.3m, from £11.6m at the end of 2015, and the group said its existing £25m facility with Lloyds Banking Group, which has the potential to be expanded to £30m, is available until June 2019 to accommodate working capital and acquisition funding.

Bissett added: “The 15 per cent increase in pre-tax profits in 2016 represents the seventh consecutive year of profit growth for Macfarlane and the group has started 2017 well.”

Analysts at house broker Arden Partners said: “We anticipate earnings growth of 13 per cent in 2017 and note the potential for further acquisition earnings uplift in due course. The growth strategy is being part funded by equity raisings and, as liquidity improves, we believe the shares will increasingly appear on the radar of growth funds.”