The Glasgow-headquartered packaging company reported sales of £133.5m for the six-month period ended 30 June 2021, an increase of 26.5% on the £105.5m figure recorded a year ago, and pre-tax profit of £7.8m, up 120.6% on the H1 2020 figure of £3.5m.

The group said this also represents a 24.2% increase in sales and a doubling of pre-tax profit compared to the same period in 2019, prior to any impact from the coronavirus pandemic.

The positive results were achieved against a backdrop of “ongoing difficult operating conditions due to Covid-19, significant inflationary pressure on input costs and supply shortages of some materials”, the group stated.

The company’s Packaging Distribution arm achieved sales growth of 21.3% and growth in operating profit before amortisation and impairment of 71.4% compared to the same period last year.

Packaging Distribution has grown sales through strong demand from existing customers in the e-commerce retail, and medical sectors, and recovery in several industrial sectors.

While demand from the aerospace, high street retail, and hospitality sectors continues to be weak, the group said new business activity has increased significantly compared to the same period in 2020, and Carters Packaging has traded strongly since it was acquired in March.

The group said its Manufacturing Operations arm has benefited from the acquisition of GWP in February, which is performing ahead of expectations, and a strong recovery in the division’s packaging design and manufacture business, which returned to profit following the restructuring actions the group took in the second half of 2020.

Macfarlane Group chief executive Peter Atkinson told Printweek these included changes to the workforce, and refocusing the business from the “weaker aerospace sector towards more sustainable and reliable business sectors like diagnostics and health”. Macfarlane also strengthened the division’s partnership with the group’s distribution business, to which it is a supplier.

The labels part of the business saw profitability below the same period in 2020 due to higher costs to serve customers offsetting a growth in sales.

Commenting on the overall results, Atkinson said: “2020 was obviously a challenging year for us but we delivered a very resilient performance, and clearly this is an encouraging start for 2021.”

He added a “whole series” of factors had driven the company’s positive performance with one of the key features being the continuing growth in its sales in the e-commerce related part of the business, which “remains strong”.

“We as consumers during Covid all pivoted to buying stuff online, and as lockdowns have started to ease a little bit, clearly our purchasing behaviour doesn’t appear to have changed dramatically.”

Macfarlane said that after reassessing projected profits and cash flows in Manufacturing Operations, an impairment of historic goodwill held at a consolidated level of £1m has been charged in H1 2021.

The group’s £7.8m pre-tax profit figure was stated after charging amortisation of customer relationships and brand values of £1.6m and finance costs of £700,000, as well as the £1m goodwill impairment.

The group’s net bank debt as at 30 June 2021 was £8.7m, an increase of £8.1m from its 31 December 2020 position following £12.2m of investment in its acquisitions of GWP and Carters. The group said it is operating well within its existing bank facility of £30m, which runs until 31 December 2025.

Its pension scheme was in surplus as at 30 June 2021, compared to a deficit at 31 December 2020 of £1.5m. Continued contributions from Macfarlane Group and an increase in the discount rate, offset by lower investment returns during the period, were the reasons given for this improvement.

The board said it expects that the group’s full year outlook for 2021 will be ahead of its previous expectations, despite expected challenges in the second half including further inflationary pressure on input prices, continuing supply constraints on most raw materials, and operating costs increasing due to staffing pressures.

The board is recommending a 24.3% increase in the interim dividend to 0.87p per share to be paid on 14 October 2021 to shareholders on the register as at 17 September 2021.

1,000-plus staff Macfarlane Group’s share price leapt by 16% to a 52-week high of 139.05p in early trading following the publication of the results this morning (26 August) but had since settled down slightly to 134.52p at the time of writing.