Macfarlane in hunt for more acquisitions
Packaging group Macfarlane is in the mood to buy more businesses after stating this morning that its recent acquisitions are performing well.
The Glasgow-based company confirmed expectations that trading has been stronger since June than in the first half of the year.
New business wins helped sales rise 7% compared with last year, or 5% before he contribution of the acquisition of Lane Packaging and Network Packaging.
Gross margins remain slightly lower than last year, reflecting competitive market conditions, but have improved in the second half of the year. Overhead costs continue to be tightly controlled and operating profit before exceptional items is ahead of the level achieved in 2013.
The company expects operating profit for the full year, before exceptional items, from packaging distribution to be well above that achieved in 2013.
Manufacturing sales are 2% below 2013 for the year to date but gross margins and profitability have been maintained at a similar level to 2013. The labels business faces margin pressure as a result of the competitive markets for self-adhesive labels, particularly in the UK retail sector.
This pressure is only being partially offset by continued growth in re-sealable labels and means performance is below that achieved in 2013. As a result, operating profit for the full year before exceptional items in the manufacturing operations is expected to be below 2013 levels.
Interest costs for the Group in 2014 are at similar levels to last year.
The net result of the varying divisional performance is that the group’s profit before exceptional items for 2014 to date is ahead of the corresponding period in 2013 and these trends are expected to continue for the remainder of the year.
Bank borrowings as at 30 June 2014 are expected to reduce by the end of the year as a result of the traditionally strong working capital inflows in the final quarter.
The Board reiterates its objective to pay a full dividend for 2014.
Chairman, Graeme Bissett, said he was pleased that the ‘planned uplift’ in performance in the second half was being delivered.
“Both of our acquisitions in packaging distribution in 2014 are performing well and we will continue to seek further value-enhancing acquisitions as part of our growth strategy. The board remains confident that our full year expectations will be met.”