Macfarlane expects profits ‘well above’ last year
Macfarlane Group, the packaging company, said profits are expected to be “well above” last year as the growth momentum achieved in the first half of 2015 has been maintained.
With the normal uplift in the trading cycle in the final quarter, the board is confident that its full year expectations will be met.
Sales in packaging distribution for the year to date have increased by 14% compared to 2014, of which 6% represents organic growth.
Gross margin continues to run ahead of the 2014 level and the growth in overhead costs versus 2014 is mainly related to the impact of acquisitions.
The most recent acquisition, One Packaging which was completed in August 2015, is performing in line with plan. Operating profit for the full year from packaging distribution is expected to be well above that achieved in 2014.
Sales from manufacturing operations are showing improvement in the second half, but year to date are 2% below 2014.
Demand weakness in customers’ export markets continues to negatively impact sales in Packaging Design and Manufacture and the exit of low margin business in Labels is impacting sales but improving margin.
Operating profit for the full year in manufacturing operations is expected to be slightly above 2014 levels.
The company said interest costs for the Group in 2015 are at similar levels to last year.
The net effect of these factors is that Macfarlane’s profit before tax for 2015 to date continues to be well above the corresponding period in 2014 and this trend is expected to continue for the remainder of this year.
Bank borrowings of £11.6m at 30 June increased following the acquisition of One Packaging Limited but are expected to reduce by the end of the year as a result of the group’s traditionally strong working capital inflows in the final quarter.
Graeme Bissett, chairman (pictured), said: “I am pleased to report that Macfarlane Group’s performance in the second half of 2015 continues to demonstrate good progress following the growth seen in the first half of the year. The board remains confident that our full year expectations will be met.”