Shares fall

First quarter sales and profits slip at Macfarlane

Macfarlane lorry
Macfarlane Group says expectations are unchanged

Packaging company Macfarlane Group said the start of 2024 has been challenging with first quarter sales and profits below the same period in 2023. However, its expectations for the full year are unchanged.

Sales in the first quarter were 9.5% lower than the corresponding three months last year with continued weak customer demand and price deflation.

The impact on profit was partially offset by strong gross margins and the benefit of acquisitions. Investors cooled on the stock and the shares closed down 9.86%, or 14p, at 128p.

In March 2024 the Glasgow company completed the acquisition of Allpack Packaging Supplies, a protective packaging distributor based in Bury St Edmunds.

The group expects an improved trading performance in the second half of 2024 through the conversion of a strong new business pipeline combined with some sales recovery from existing customers, good management of gross margins, control of costs and further benefits from M&A activity.

Net bank funds at 31 March 2024 were £4.7m, an improvement on the position at 31 December 2023 (£0.5m). The Group continues to operate well within its bank facilities of £35m and related covenants, which are committed until December 2025.

Peter Atkinson, CEO, told shareholders at today’s AGM that the company expects to do more acquisitions.

“We would be very disappointed if we don’t do two [this year]. We have done one. We have got one acquisition which is very well progressed and a couple more which are not quite as well progressed, but which could happen this year.”

Aleen Gulvanessian told the meeting: “On presenting our 2023 results we indicated that the challenging market conditions experienced in the latter part of 2023 would continue into 2024 and this has been the case.

“We expect some improvement in trading conditions in the second half of 2024 and we have a clear plan of management actions to enable the group to continue its progress.”

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