In its preliminary results posted this morning (27 February) for the year ended 31 December 2024, the Glasgow-headquartered packaging giant recorded turnover of £270.4m, down from the £280.7m it achieved in its 2023 results. Its pre-tax profit was £20.9m, up from the £20.3m figure it recorded for 2023.

Group adjusted operating profit as a percentage of revenue improved to 10.1% (2023: 9.8%).

Basic and diluted earnings per share were 9.76p per share (2023: 9.44p per share) and 9.74p per share (2023: 9.34p per share) respectively.

Packaging Distribution revenue fell by 7% year-on-year to £228.8m (2023: £244.9m). The group said continued weak customer demand and selling price deflation were partially offset by strong new business performance and the benefit of the acquisitions of Gottlieb in April 2023 and Allpack Direct in March 2024.

Gross margins increased to 37.1% (2023: 35.7%), which the group said reflected effective management of input-price changes.

Sales in Macfarlane’s manufacturing operations division were up by 16% to £41.7m (2023: £35.8m), which the company said reflected contributions from B&D Group, Suttons, and Polyformes, acquired across 2023 and 2024; and marginally lower organic sales due to selling price deflation.

Gross margins were down to 43.2% (2023: 44.5%), with the slight dip attributed to selling price deflation.

Macfarlane chief executive Peter Atkinson told Printweek: “We always said when we reported at the half year that 2024 was going to be a year with quite a degree of headwind in it, and that has very much proved to be the case.

“The performance in the year has been pretty solid, all things considered, and certainly in line with the expectations that the market had for the business. And the fact that we’ve managed to deliver profit growth, even though it’s small, against the backdrop of weaker revenue because of demand conditions, I think is a good reflection on the resilient nature of the business.”

The group said net cash inflow from operating activities of £25.4m (2023: £33.5m) reflected the unwinding of opening working capital through 2023 due to the easing of supply chain constraints and stability through 2024.

Net bank debt was £1.9m on 31 December 2024, following a net cash outflow of £2.4m in the year, after £15m (2023: £16.6m) of investment in acquisitions and capital expenditure.

The group negotiated an improved banking facility of £40m with Bank of Scotland and HSBC UK Bank during 2024 which is committed until November 2027, with options to extend it by a further two years to November 2029, and by an additional £20m.

It will support the continuing investment in the group’s organic growth and acquisition strategy in the medium term.

The pension scheme surplus was £9.6m at 31 December 2024 (31 December 2023: £9.9m) with the group not required to make further contributions.

The board proposed a final dividend of 2.70p per share (2023: 2.65p per share) payable on 13 June 2025, taking the total dividend for 2024 to 3.66p per share (2023: 3.59p per share) up 2% on 2023.

On 1 January 2025, David Stirling was appointed to the board as an independent non-executive director following the retirement of Bob McLellan on 31 December 2023.

Having previously been group CEO of Zotefoams, Macfarlane said Stirling brought extensive listed-company and protective packaging industry experience, which would be of significant benefit to the board.

On the sustainability front, in 2024, the group achieved a reduction in its Scope 1 and 2 carbon emissions and completed the mapping of its Scope 3 emissions. The group said it was committed to reducing its direct impact on the environment through further electrification of its delivery fleet and expanding the use of renewable energy.

Looking ahead, the group said it expected 2025 to be another challenging year, although the year has started with good new business momentum and the recent acquisition of The Pitreavie Group, with more M&A activity planned.

Atkinson added: “We don’t see the external environment improving in 2025. And in reality, there’s going to be further headwinds in terms of costs with the National Insurance increase and the minimum wage increase. But we’ve made good progress on new business in 2024.

“The impact of EPR [Extended Producer Responsibility] legislation, while on one side is a negative to us because it’s causing people to want to use less packaging, which is absolutely right, it’s also a benefit to us in the fact that we’ve got a lot of customers asking for us to help them find a way of using less packaging; helping to redesign their packs or use different materials.

“That, in reality, is one of the key things that's fuelling our new business growth in 2024 which will flow forward into 2025.

“We’d expect to do more acquisitions this year as well. Typically, we do two or three per year. We’ve started off with the first one, but we’ve got a strong pipeline, and we’d expect to do at least another one, if not two, during the year.

“Our appetite for acquisitions is significant. The challenge isn’t the opportunity, it’s the bandwidth to manage them, which is why we try and limit ourselves to two or three a year, so we don’t stretch management bandwidth.”

Atkinson told Printweek the group was planning to mitigate the National Insurance and minimum wage increases with a hiring freeze in place – unless a specific role needed to be recruited for – and trying to avoid replacing colleagues that leave during the period.

“And if there’s investments that were planned for the year that we can’t see giving us a material benefit during the period, then we’re putting them on hold, or in some cases postponing them. So we’ve got a very tight control over the cost base already started,” Atkinson added.

Macfarlane Group employs over 1,000 people at 43 sites, principally in the UK, as well as in Ireland, Germany, and the Netherlands.

The company’s share price was down by 1.86% at the time of writing just before lunchtime today, to 105.50p (52-week high: 147.50p, low: 100.75p).