Interim results across the Glasgow-based group’s two divisions – packaging distribution and manufacturing operations – showed that revenue remained flat in the face of reduced demand and price deflation but profits before tax and exceptional items shot 65% ahead of last year to £1.5m (2011: £0.9m). The increase was attributed to an improvement in margins.  

The group also reduced its net debt by 25% to £7.8 million compared to the same point in 2011.

Some improvement in the group’s pension deficit was achieved, decreasing from £20.5m in December 2011 to £17.3m in June 2012. However the figure still represents a loss on the £15.6m deficit recorded in June 2011. Macfarlane blamed its struggle to contain the deficit on the adverse impact of bond yield movements.

Uncertainty over when and what level of interim dividends would be paid was cleared up in a statement from chairman Graeme Bissett, who succeeded Archie Hunter in May this year.

Bissett confirmed that interim dividend payments would remain at the 2011 level of £0.50 per share and paid on 11 October 2012, however he warned that the company remained "cautious" in relation to the full-year dividend.

Revenue at the group’s packaging distribution operation remained level with 2011 at £55m reflecting price deflation and reduced demand although the division reported strong new business growth. However operating profit before exceptional items increased to £1.7m (2011: £1.3m).

Meanwhile Macfarlane’s labels and packaging manufacturing business achieved a slight increase in operating profit from £0.1m in June 2011 to £0.3m but revenue was down 5% on the same period to £13m.

Bissett said that trading in July and August had continued to be satisfactory and in line with expectations but warned that demand conditions in the UK remained weak.

He added: "It would be unwise to presume that general economic conditions will improve in the foreseeable future.

"However, our first half results indicate what can be achieved by talented and determined management and staff, working closely with our customers and other partners, and this gives us confidence that we can deliver to our expectations for 2012."

The Macfarlane Group employs more than 700 people across 22 sites, principally in the UK and Ireland.