THERE is still good news to come for Sidlaw, according to chief executive John Durston.
Yesterday the Edinburgh-based flexible packaging manufacturer announced a doubling in half-time profits to #3.5m in its continuing activities after excluding exceptional items.
These totalled #17.3m, arising chiefly from the sale of the oil industry services activities.
Durston is on the look out for acquisitions or alliances which would propel Sidlaw from seventh place in the European industry rankings to about number three in the next two or three years. Durston would particularly like to pick up something in Germany or else a division of a quoted company with immediate firepower of up to #25m available.
He added that he does not want the company to be a niche player but instead to play a major part in industry consolidation.
Profitability in the six months to end-March was helped by a surge in the return on sales in Britain which has almost trebled year on year to 6.2% as the benefits from past capital investment have powered through.
Margins should reach at least 6.5% in the current half-year as volume rises, with Sidlaw benefiting from the increasing demand for highly-decorated packaging for biscuits, nuts, and confectionery from its major customers.
These include Mars, Cadbury, KP, and Northern Foods, which gets packaging for its pies and pasties from the Stonehaven factory.
The UK operations are working near full capacity, particularly on eight-colour gravure.
Customers are also coming back for 10-colour work at the Colodense line at Bristol after initial teething problems.
In the half-year, UK volumes surged ahead by 10.5%.
There was also good progress in both France and Spain with the French operations soon to benefit from an increase in capacity, which has the backing of Mars and Bahlsen.
However, there was a small loss in the Dutch operations due to Pepsi deciding to rationalise the number of its suppliers, although Sidlaw is hopeful of getting some small contracts.
Overall turnover in sterling terms stood still at #74.6m although there was a small advance if the #3.7m of translation impact is excluded.
One particularly promising development is the P-Plus breathing packaging for the fresh food industry.
It appears that Sidlaw is one step ahead in technology in a business that is now turning over #15m of annual sales.
The capital expenditure programme is running at around #16m annually with some #8m being spent this year on solvent emission control.
That is a matter which offers Sidlaw opportunities, as many smaller competitors cannot afford to comply with the regulations.
Long-term shareholders have subscribed to rights issues at 275p and 180p in recent years.
Yesterday they saw the shares rise 4p to 115.5p
The interim dividend has been raised by a quarter to 1.25p.
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