In the year to 31 December, turnover increased by 7% to £144.6m; profit before tax and exceptional items leapt 14.7% to £3.9m.

However, the group is struggling to contain its pension deficit, which jumped from £15.7m to £20.5m because of the decline in bond yields.

Chairman Archie Hunter said this had added £3m to the Macfarlane's gross pension deficit in the last quarter of 2011 alone.

Further actions are planned to reduce it. The adverse effect on the firm's reserves means it may need to change the timing and amount of its interim dividend this year, although the group said it still intended to pay a full dividend.

Hunter, who has worked at the business since 1998 and became chairman in 2003, announced that he intends to step down from his role at Macfarlane's AGM in May. He said: "I believe now is the time for a new chairman to take the company to its next stage of development."

A search for a successor is underway.

Macfarlane's packaging distribution wing put in a strong performance, winning almost £9m in new business and growing internet-based sales by 11%.

In labels and packaging manufacturing, results were described as "disappointing", as price competition in self-adhesive labels hit margins. The bright spot was its resealable label system Reseal-it, where sales grew by 41%.

Shares fell 3.75p to 18.25p on the news.