In the statement released yesterday (22 November) that covers trading for the period from 30 June 2016 to 31 October 2016, the Glasgow-headquartered company said the momentum it achieved in the first half of 2016 has strengthened in the second half of the year.
The group is confident that, as long as it benefits from the normal e-commerce uplift in the trading cycle in the final quarter of 2016, its full-year expectations will be met.
Sales for the year to date in its packaging distribution arm have increased by 8% and the firm said it has been particularly encouraged by its most recent acquisition, of Nelsons for Cartons & Packaging, which was completed in July. This followed acquisitions of Colton Packaging Teesside and Edward McNeil earlier in the year.
Gross margin is at similar levels to 2015 though there was an increase in overhead costs year-on-year, which the group said is largely related to the impact of acquisitions. Operating profit for the full year in the packaging distribution arm is expected to be well above that achieved in 2015.
“We’ve had an extremely good year so far in terms of both sales growth and profit growth,” said Macfarlane Group chief executive Peter Atkinson.
“Because our business is very closely connected to the e-commerce sector, which is obviously extremely busy during Q4, our main focus for this period is making sure we do an effective job in servicing our customers.”
He added: “Our acquisitions are performing in line with expectations – extremely well – and we have got a pipeline of other acquisition opportunities that we’re continuing to work on. We’ll hopefully be announcing some more in 2017.”
Combined sales from the two businesses in the group’s manufacturing operations division are showing improvement in the second half of the year.
Sales for the year to date are 7% below 2015 but the company said this primarily reflects its planned strategy in the first half to reduce activity in its low margin self-adhesive labels business in order to focus more on re-sealable labels opportunities.
“The re-sealable label range adds more value for the customers so our real focus is driving that. These labels are usually used for customers to open and close packs, which also helps to reduce food wastage. The growth in that sector is encouraging for us,” said Atkinson.
Operating profit for the full year in the manufacturing operations arm is expected to be similar to 2015 levels.
The group’s pre-tax profit for the year to date continues to be well above the corresponding period in 2015, given the contribution from acquisitions, and this trend is expected to continue for the remainder of 2016.
Macfarlane Group employs more than 780 people at 29 sites, predominantly in the UK and Ireland, and has over 20,000 customers in the UK, Europe and the US.
The group’s share price was 56.2p at the time of writing, up from 54.4p at the start of morning trading, but down from the day’s high of 57.98p (12 month high: 69.52p, low: 48p).
