Macfarlane first-half sales up 26% to £133m

Shares of Glasgow-based packaging, design and distribution firm Macfarlane Group rose about 15% on Thursday after it said its sales rose 26.5% to £133.5 million and profit before tax soared 120.6% to £7.8 million in the six months to June 30, 2021.

Macfarlane’s board now expects its full year outlook for 2021 “will be ahead of its previous expectations, despite the challenges we are expecting in H2 2021.”

The company said it expects the second half of 2021 to be challenging “as we anticipate further inflationary pressure on input prices, continuing supply constraints on most raw materials and operating costs increasing due to staffing pressures.”

Interim dividend is increased 24.3% to 0.87p per share.

Macfarlane Group chairman Stuart Paterson said:  “Macfarlane Group achieved good sales growth in the first half of 2021, benefiting from the ongoing structural shift to e-commerce retail and recovery in certain industrial sectors which were affected by Covid-19 in the first six months of 2020.

“Despite ongoing difficult operating conditions due to Covid-19, significant inflationary pressure on input costs and supply shortages of some materials, the business has produced a strong profit performance. 

“Our people have excelled, maintaining service to our customers in the most challenging environment.  

“Packaging Distribution has grown sales through strong demand from existing customers in the e-commerce retail and medical sectors and recovery in a number of industrial sectors.  

“Demand from the aerospace, high street retail and hospitality sectors continues to be weak.

“New business activity has increased significantly compared to the same period in 2020 and Carters has traded strongly since acquisition.  

“Manufacturing Operations has benefited from the acquisition of GWP, which is performing ahead of expectations, and a strong recovery in the Packaging Design and Manufacture business which returned to profit following the restructuring actions we took in H2 2020. 

“Labels’ profitability is below the same period in 2020 due to higher costs to serve customers offsetting growth in sales. 

“After re-assessing projected profits and cash flows in Manufacturing Operations, an impairment of historic goodwill held at consolidated level of £1m has been charged in H1 2021.

“It is pleasing to report that the effective management of operating cash has enabled the business to finance two further good quality acquisitions through our existing bank facility.

“In addition, the pension scheme is now in surplus.   

“The performance of the business in the first half of 2021 continues to demonstrate the effectiveness of our strategy and the resilience of our business model. 

“We expect the second half of 2021 to be challenging as we anticipate further inflationary pressure on input prices, continuing supply constraints on most raw materials and operating costs increasing due to staffing pressures. 

“However, the group has previously demonstrated effective management of these challenges and, as a result of this and the performance in H1 2021, the board expects the group will exceed its previous expectations for the full year.

“The board is recommending a 24.3% increase in the interim dividend to 0.87p per share to be paid on 14 October 2021 to shareholders on the register as at 17 September 2021.

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.