In its preliminary results posted this morning (24 February) for the year ended 31 December 2021, the Glasgow-headquartered packaging giant recorded turnover of £264.5m, up 26% on the £210.2m it achieved in its 2020 results.
These have been restated in accordance with IFRS5 2020 to reflect the result of the Labels division – which was sold to Reflex Group on 31 December 2021 – as a discontinued operation.
The company’s pre-tax profit was £18.7m, up 50% on its restated 2020 figure of £12.4m.
Macfarlane said that in the face of challenging market conditions its team “has shown great commitment and dedication in servicing our customers and the board wishes to place on record its thanks for their outstanding performance in helping the group to continue its positive progress”.
Packaging Distribution recorded sales of £239.5m, up 19% year-on-year. The division saw continued strong demand from customers in the e-commerce and medical sectors and some recovery in the home and garden, automotive, and electronics sectors, which were adversely impacted by the coronavirus pandemic in 2020. Sales to e-commerce retail companies in 2021 represented 30% of the division’s sales, compared to 28% in 2020.
New business in the division grew by 9% in 2021, due primarily to the impact of Covid-19 restrictions on 2020 performance, Macfarlane added.
The business experienced significant increases in input prices across all product categories throughout 2021. Against this backdrop, the gross margin in Packaging Distribution held up at 32.4%, versus 32.5% in 2020.
The division also benefited from the 2021 acquisition of protective packaging distributor Carters Packaging (Cornwall), based in Redruth.
Sales in Macfarlane’s manufacturing operations division ballooned by 194% in 2021 to £25m, including organic growth of 16%, following a strong recovery in the automotive and defence sectors, and supplemented by £15.1m sales through the 2021 acquisition of Wiltshire-based protective packaging manufacturing and distribution business GWP.
The Labels division had been included in Manufacturing Operations in 2020, but following its sale has now been classified as a discontinued operation.
Macfarlane chief executive Peter Atkinson told Printweek: “The results have reflected and demonstrated a pretty strong performance in extremely challenging conditions. A key part of that is the resilience of our businesses to whatever is happening in the markets that we serve.
“I think this is based upon the fact that we serve a range of industries, so we’re not overly dependent on any one industry or any specific customers or specific market sectors. And the proposition that we bring customers about value and sustainability, and the quality and commitment of the people that have got to deliver that, is all a parcel that underpins the strength of our numbers.”
The group’s net bank funds on 31 December 2021 stood at £2.5m, an increase of £3m from 31 December 2020, including £12.2m of investment in the acquisitions of GWP and Carters Packaging and £5.2m of net proceeds from the sale of the Labels division. The group said it is operating well within its existing bank facility of £30m, which runs until 31 December 2025.
The proceeds from the sale of the Labels division will be reinvested in both organic investment and further acquisitions, according to group finance director Ivor Gray, who told Printweek “we’ll be looking to do maybe one or two acquisitions this year”.
The group’s pension scheme had a surplus of £8.3m at 31 December 2021, compared to a deficit of £1.5m on 31 December 2020. The business said the improvement is due to continued contributions from Macfarlane Group, an increase in the discount rate, and growth in investments during the year.
Basic and diluted earnings per share for 2021 were 7.98p (2020: 6.45p per share) and 7.90p per share (2020: 6.42p per share) respectively.
The board is proposing a final dividend of 2.33p per share, which would take the total dividend for 2021 to 3.20p per share, up 25% on 2020.
The company's share price climbed by 2.8% in early trading this morning to 128p but had since fallen back to 123.63p at the time of writing.
Looking ahead, the group said it anticipates that 2022 will see ongoing inflationary pressure on input prices, continuing supply constraints on most raw materials, and operating costs increasing due to staffing pressures.
However, despite these challenges, trading in the early months has been encouraging – with revenue for 2022 so far up on the same period in 2021 according to Atkinson – and the board is confident that it will continue to deliver further growth in 2022.
Finally, the group’s current chair Stuart Paterson, who is entering his 10th year in the role, has given the board notice of his intention to stand down later this year once a new chair has been identified and a smooth transition ensured. Paterson said plans for his succession are “well advanced”.
