MACFARLANE Group has declared it expects profits for this year to eclipse its results for 2016 as it underlined the impact made by recent acquisitions, sending shares up nearly six per cent.
The Glasgow-based packaging firm, which provides internet delivery solutions for companies such as Selfridges and Feel Unique, is heading into the festive period with the momentum built over the first half of the year continuing into the second.
Macfarlane revealed yesterday that sales at its dominant packaging distribution arm are up 11 per cent up for the year to date, and highlighted a strong performance from its recently-acquired Greenwood Stock Boxes in the final quarter. The £16.75 million deal to acquire Greenwoods, unveiled in September, was Macfarlane’s biggest to date, and its seventh since 2014 following a spate of acquisitions in 2016. Those included deals to buy Edward O’Neil in Glasgow, and English-based packaging firms Nelsons and Colton Packaging.
The company’s strategy of expanding through acquisitions and organic growth has continued to bear fruit this year. Profit before tax so far for 2017 is “well above the corresponding period in 2016 with a good contribution from acquisitions”, Macfarlane said, adding that “this trend is expected to continue for the remainder of the year.” The company made a pre-tax profit of £7.8m on turnover of £179.8m in 2016.
Macfarlane said operating profit from its dominant packaging distribution business is expected to be “well above” its result for 2016. However operating profit from manufacturing operations, which makes re-sealable labels for the grocery sector and packs for medical components and the automotive sector, is expected to come in at the same level as last year. Sales across its combined manufacturing operations are down three per cent so far this year, which Macfarlane said was “principally due to our continuing programme to focus on higher margin sales.”
Stuart Paterson, the outgoing finance director of Forth Ports who succeeded Graeme Bissett as Macfarlane chairman in October, said: “I am pleased to report that Macfarlane Group’s performance in the second half of 2017 has continued to reflect the good progress demonstrated in the first half. The Board remains confident that our full year expectations will be met.”
Macfarlane, which has been expanding sales in Europe in the last three years as a member the Novupak alliance alongside European distributors and Moonen and Boxon, expects the bank borrowings of £14.6m it had at June 30 would be reduced by the end of the year. This is based on the strong working capital inflows the company traditionally receives in the final quarter.
Shares closed up 4.25p at 78.25p.
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