It reported a pre-tax profit of 1.3m, compared to a loss of 6.8m last year, although this was boosted by the sale of its Braehead property for 8.6m, which contributed 3.6m in the period.

Operating losses narrowed to 1.9m compared to 6.5m in the same period last year. Turnover was 63m compared to 66m last year.

Macfarlane's labels division performed strongly with "improved profits due to strong demand from existing customers for new product lines". It achieved volume growth of 5%.

The group has made job cuts since June last year, bringing the total workforce to 425 from around 500. "The board is convinced that confidence is soundly based and that the group can expect to return to profitable growth in 2005," said Macfarlane chairman Archie Hunter.

Story by Philip Chadwick