Macfarlane hails distribution performance despite group profit drop

In a trading statement today, the Glasgow-based firm said the recession had “inevitably” impacted demand for its products and group revenues fell by 6% to £123.6m. Pre-tax profit fell by a third compared to 2008 to £2.5m.

Macfarlane chairman Archie Hunter said the packaging manufacturing operations had seen a steep decline in demand, particularly in the first half of the year, while the labels business was hit by higher raw materials costs.

The manufacturing businesses reported a £224,000 loss compared to a £1.8m profit in 2008.

However, the firm’s distribution business, which accounts for almost 80% of revenue, reported a 35% increase in profit of £3.9m despite falling sales.

Macfarlane said the division was boosted by the integration of Allpoint Packaging that was bought in 2008 and securing new business. New business revenues increased by 53% compared to the previous year.

Chief executive Peter Atkinson told Packaging News said it was more difficult for the manufacturing business to take costs out quickly, due to their fixed nature. “But the manufacturing business responded well to a difficult first half and exited the year well.

Atkinson said there had also been growth in web-based sales that accounted for about 16% of sales last year. “It’s not replacing traditional sales but due to the visibility of products on the net. Often customers will research and make enquiries via the web before meeting face to face,” he said.

Macfarlane has also started to consider acquisitions again having bought three firms in the three years to 2009. “We’re looking at a number of opportunities, but nothing is certain yet,” said Atkinson.

The firm has a positive outlook for the coming year particularly from its newly launched promotional packaging business that came with the Allpoint buy. “We are building that and it’s started to contribute quite nicely to the business,” said Atkinson.

Hunter added he was also encouraged by the trading at the start of the year.

“While we continue to review acquisition opportunities, [our business plan] is not reliant on acquisitions nor on an economic upturn although Macfarlane Group would clearly benefit from any sustained economic development,” he said.

MACFARLANE 2009 RESULTS
(Figures in £000)

Revenue 123,596 (131,410 in 2008)
Operating profit 3,707 (4,708)
Pre-tax profit 2,484 (3,702)
Profit from continuing operations 1,970 (2,878)
Profit after discontinued operations 2,321 (1,795)

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