The Glasgow-headquartered packaging company reported sales of £141.6m for the six-month period ended 30 June 2023, up 2% on the £139.2m achieved a year ago, and pre-tax profit of £9.99m, up 13% on the £8.86m figure it posted at the same stage last year.

Aleen Gulvanessian, chair of Macfarlane Group, said the group had “demonstrated resilience in the first half of 2023, against the backdrop of a slowdown in customer demand”.

“We have executed two high quality acquisitions which are both performing well, we continue to make good progress in Europe and have positive new business momentum.

“The inflationary impact of operating cost increases has been offset by effective input price management. We opened our new Northern Innovation Lab in March 2023 which is already having early success in helping our customers reduce their total cost of packaging and carbon footprint.”

Macfarlane Group’s Packaging Distribution arm achieved revenue growth of £0.4m, taking it to £124m in H1 2023, boosted by a good contribution from the acquisitions of PackMann in May 2022 and Gottlieb in April this year, combined with organic growth in Europe and new business wins, which offset lower demand from customers in the UK and Ireland.

The company said operating profit before amortisation increased by 6% to £9.4m (H1 2022: £8.9m) through effective management of input pricing, which offset inflation in operating costs.

Manufacturing Operations, meanwhile, delivered stronger revenue growth of 13% to £17.7m (H1 2022: £15.7m). This was attributed to a good contribution from Suttons, acquired in February this year, which offset the slower demand in certain industrial markets. Operating profit before amortisation increased by 36% to £3.4m (H1 2022: £2.5m).

Speaking to Printweek, Macfarlane Group chief executive Peter Atkinson said: “We always knew that coming from the highs of 2021 and 2022, when the market was helping us, that in 2023 the market wouldn’t be helping us – cost of living, reducing demand, the return to the high street reducing e-commerce, and then cost inflation in terms of labour and energy.

“So everything that has contributed to our first-half performance has been about implementing self-help programmes, and that’s been by strengthening our acquisition programme, investing in our European ‘Follow the Customer’ programme – and we made really good progress there, and then creating new business momentum.

“If your existing customers aren’t buying as much then you’ve got to find more new customers, so we’re really focusing on new business and using the new Innovation Lab in the North West of England as part of that programme.

“Going forward we don’t expect the market conditions to improve for the next 6 to 12 or 18 months probably, so it’s really absolutely deep-dive into these self-help programmes and ensure they’re executed properly so that we can keep our profitability growing.”

Atkinson added the company has a strong acquisition pipeline, both in the UK and in Europe, and was “pretty hopeful” that one more acquisition would be completed before the end of the year.

The group’s net bank debt on 30 June 2023 was £3.3m – a cash inflow of £0.1m from 31 December 2022, after £11.4m of investment in acquisitions and £1.4m of capital expenditure. The group said it is operating well within its bank facility of £35m, increased from £30m at 31 December 2022, which runs until 31 December 2025.

Its pension scheme surplus increased to £12.8m at 30 June 2023 (31 December 2022: £10.2m). The improvement is due to continued contributions from the group and an increase in the discount rate, offset by lower investment returns in H1 2023.

Meanwhile, the business said effective management of working capital resulted in net cash inflow from operating activities of £20.3m (H1 2022: £6.5m).

Macfarlane added that while it is expecting the second half of 2023 to remain challenging, its good progress in Europe, diverse customer base, strong new business momentum, and effective management of pricing and costs mean that its profit expectations for the full year remain unchanged.

Basic and diluted earnings per share were 4.74p per share (H1 2022: 4.36p per share) and 4.70p per share (H1 2022: 4.31p per share), respectively.

The interim dividend has increased by 4% to 0.94p per share (H1 2021: 0.90p per share).

1,000-plus staff Macfarlane Group’s share price was flat on yesterday’s close at the time of writing at lunchtime today (24 August) at 110p (52-week high: 121p, low: 85.20p).