MACFARLANE Group, the Glasgow-based packaging specialist, has underlined its confidence of delivering a further year of growth in 2023, despite ongoing uncertainty around costs and the impact on consumer demand from the inflation crisis.
It came as the company, which provides packaging solutions to a wide range of sectors, reported a seven per cent rise in pre-tax profits to £19.9 million for 2022. Revenue from continuing operations climbed by 10% to £290.4m despite an anticipated slowdown in demand from the e-commerce sector, as consumers swapped shopping online with visits to stores after Covid restrictions eased.
Macfarlane said that its dominant packaging distribution arm had offset the reduced demand from e-commerce customers by recovering input prices and the contribution of its acquisitions of Cornwall’s Carters Packaging in March 2021 and German firm PackMann in May 2022.
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The division grew sales by 8% to £259.7m, though operating profit before amortisation edged up just 1% to £19.9m because of cost increases. These included start-up costs related to its new distribution centre in the north-west of England, investments in IT and inflationary pressure on labour, energy and logistics.
Meanwhile, the company reported a “material recovery” of its manufacturing operations business, which provides solutions to help companies in the industrial, automotive, defence and other sectors protect products when they are being stored and transported.
With industrial markets recovering following periods of lockdown, it saw revenue gr0w by 23% to £30.8m and operating profit before amortisation climbed by 42% to £5.2m. It was helped by a strong performance from Wiltshire-based GWP Group, which was acquired in February 2021.
Macfarlane chief executive Peter Atkinson told The Herald: “2021 was such a strong year for Macfarlane Group it was always going to a challenge to repeat that level of performance. So, I think what we have achieved with the 10% revenue growth and 7% profit growth is actually a good performance in the context of a/ the market and b/ our stellar performance in 2021.”
The company warned challenging conditions would persist this year, citing uncertainty over the impact of the cost of living on customer demand and rising costs, but declared it expects to deliver further growth.
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Mr Atkinson said: “2023 has started well. Sales and profits for the first weeks of 2023 are up ahead of the same period last year, so we are looking for another year of growth for the group.”
Macfarlane has a pipeline of acquisition targets and Mr Atkinson is hopeful of concluding “at least one” deal in the first half of the year. This would “most likely” be in the UK.
The company would like to acquire in Europe but does not anticipate doing any deals until 2024. In the meantime, its strategy for Europe is based on a “follow the customer” strategy. Johnson & Johnson was highlighted as one of the biggest customers that the firm is working alongside on the continent.
The Macfarlane board recommended a final dividend of 2.52p per share. That would take the total dividend for 2022 to 3.42p per share, up 7% on the year before.
The overall headcount was 1,012 in 2022, compared with 1,038 the year before. The company sold its labels business, which employed 108 people, at the start of 2022. But, with the acquisition of PackMann, employee numbers increased by 82 on a net basis.
Shares in Macfarlane Group closed up 2p, or 1.89%, at 108p.
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