A Glasgow packaging company which supplies big-name retailers such as Dunelm, Currys, IKEA, and Boots has spelled out the cost of recent tax hikes announced by Chancellor Rachel Reeves.

Macfarlane Group, which was formed by the late Lord Macfarlane of Bearsden shortly after the Second World War, declared the rise in employer national insurance contributions and national living wage will cost the firm around £1.5 million per year when the changes take place in April.

The group, which has more than 1,000 employees at 40 sites, said it was currently reviewing mitigation actions to minimise the impact of the cost rise, without providing further details.

It came a day after Mitchells & Butlers, the pub giant which owns Glasgow’s Horseshoe Bar, warned the rise in labour costs will contribute to a £100 million cost hit this year. M&Bs noted on Wednesday that “by far the most significant increase” in its costs for the current financial year will arise from the measures.

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Macfarlane set out the cost impact for its business as it outlined the ongoing effects of challenging market conditions, which it said have resulted in weaker volumes and lower pricing that are impacting most sectors. Revenue for the period between January 1 and October 31 was down 4% compared with the same period last year.

However the firm signalled its expectation that its performance for 2024 will broadly be in line with its full-year expectations, as weaker volumes and lower pricing are offset by improved new business performance, effective management of pricing and costs, and the completion of two acquisitions during the period. Allpack Direct and Polyformes have been performing well since coming into the fold, and the group said it retains the firepower to pursue further deals.

Supported by a £35m bank facility, Macfarlane said today that net debt stood at £4.7m on October 31 after £11.3m of investment in acquisitions and £5.8m of dividend pay-outs.

Aleen Gulvanessian, chair of Macfarlane Group, said: “As outlined in our interim results, the management team is responding effectively to the market headwinds. Our strong balance sheet gives us confidence we can continue to execute accretive acquisitions.

“There is good new business momentum as customers increasingly recognise the added value we can offer both on an environmental and cost-savings basis. The group remains well-positioned to benefit when the macro-economic outlook improves.”