Macfarlane could divest manufacturing arms

Hunter declined to speculate on which businesses Macfarlane wanted to sell. However, its self-adhesive and resealable label operations in Dublin and Kilmarnock are likely to be retained as they reported improved profits in the first half of 2007.

In the six months to 30 June, the Glasgow-based firm reported overall pre-tax profits from continuing operations of £500,000, compared with a £400,000 loss in the same period last year. Sales increased 12% to £57.4m.

Macfarlane holds a 10% share of the UK packaging distribution market. Its businesses in that sector made an operating profit of £300,000, compared with a £500,000 loss for the same period in 2006, while sales rose 15%.

Macfarlane chief executive Peter Atkinson said a key part of the group's strategy was to "acquire suitable packaging distribution businesses", and that the company was "looking at several at the moment".

Macfarlane also predicted that any disposals would have a positive cash impact, and it expects to largely eliminate bank borrowing by the end of the year.

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