Takeover boost as historic Scottish packaging giant Macfarlane eyes greater stability

Chief executive Peter Atkinson said he was “pretty positive about the way the business is performing even though the numbers are not quite where we would like them to be” as the latest results revealed an 8 per cent slide in revenues to £129.6 million. Profit before tax fell 3 per cent to £9.7m in the six months to the end of June, compared with the same period a year earlier.

The firm, which employs more than 1,000 people across 40 sites supplying a range of packaging needs, said group adjusted operating profit as a percentage of revenue improved to 9.7 per cent, from 9.1 per cent. Shareholders will benefit from a marginally higher interim dividend payment of 0.96p per share, up 2 per cent, year on year. It is due to be paid on October 10.

Atkinson told The Scotsman: “We have done a really good job of hedging our costs. The challenging market conditions are all on the demand side. We have customers who are just not buying as much as they normally would but we think these are a pretty good set of results given the challenges that the market is facing.

“Hopefully we are seeing some stability being provided by a new government,” he added. “From my point of view, as a businessman, stability in the political environment tends to be a positive.”

The group has traditionally undertaken two or three bolt-on acquisitions a year and it pointed to revenue growth from the takeover of Allpack Direct in March of this year and Gottlieb in April 2023.

Atkinson added: “We have the recent acquisitions feeding through and have more to come. We have probably turned down about 20 potential acquisitions so far this year so the pipeline of opportunities is very strong and we would be very hopeful of more acquisition activity being announced in the first part of 2025.”

Finance director Ivor Gray pointed to a strong cash position at the business “providing us with firepower” and said the pension scheme was “well managed” with the company not needing to put more cash in.

While the results saw some negative impact on Macfarlane’s share price, City reaction was generally upbeat. Issuing a “buy” note, Stiflel said the firm had delivered a “resilient profit performance in a tough backdrop”.

Analysts at house brokerage Shore Capital said: “Despite the continued (and well publicised) challenges across the markets in which Macfarlane operates, the results showcase management’s effective strategy and expertise coming to the fore, as well as the value-added service demand for Macfarlane’s products/service. We note that the fundamentals of Macfarlane’s business model remain strong.”

Last month, Macfarlane further grew its presence south of the Border after buying a Bedfordshire foam specialist for almost £12m. Founded in 1977, Leighton Buzzard-based Polyformes designs and converts foam primarily for specialist protective packaging applications.