Macfarlane Group saw sales jump by more than a quarter and pre-tax profit more than double in its half-year results.
The Glasgow-based packaging company reported sales of £133.5m for the six-month period to June 30, 2021, a 26.5% increase on the figure of £105.5m pounds recorded a year ago, and pre-tax profit of £7.8 million, up. 120.6% on H1 2020 figure of £3.5m.
The group said it also represents a 24.2% increase in sales and a doubling of pre-tax profit compared to the same period in 2019, before any impact from the coronavirus pandemic.
These positive results were achieved against a backdrop of “still difficult operating conditions due to Covid-19, strong inflationary pressures on input costs and supply shortages of certain materials”, the group said.
The company’s packaging distribution arm reported sales growth of 21.3% and operating income before depreciation and amortization growth of 71.4% compared to the same period last year.
Packaging Distribution increased its sales thanks to strong demand from existing customers in the online retail and medical sectors, and recovery in several industrial sectors.
While demand from the aerospace, retail and hospitality sectors remains weak, the group said new business activity has increased significantly compared to the same period in 2020, and Carters Packaging has evolved strongly since its acquisition in March.
The group said its Manufacturing Operations arm benefited from the February acquisition of GWP, which performed better than expected, and a strong recovery in the division’s packaging design and manufacturing business, which returned to profit following the restructuring measures taken by the group in the second half of 2020.
Macfarlane Group chief executive Peter Atkinson said Print week these included changes in the workforce and the refocusing of business from the “weaker aerospace sector to more sustainable and reliable business sectors like diagnostics and healthcare”. Macfarlane has also strengthened the division’s partnership with the group’s distribution activities, of which it is a supplier.
The labels portion of the business saw lower profitability than the same period in 2020 due to higher costs to serve customers offsetting sales growth.
Commenting on the overall results, Atkinson said: “2020 has obviously been a tough year for us, but we’ve delivered a very resilient performance, and it’s clearly an encouraging start to 2021.”
He added that a “whole set” of factors drove the company’s positive performance, with one key feature being its continued sales growth in the e-commerce related part of the business, which “remains strong”.
“As consumers during Covid, we’ve all pivoted to buying things online, and as the lockdowns have started to ease a bit, it’s clear that our buying behavior doesn’t seem to have changed dramatically.”
Macfarlane said that after reassessing expected profit and cash flow in manufacturing operations, an impairment of historical goodwill held at a consolidated level of £1m was charged in the first half of 2021.
The group’s pre-tax profit figure of £7.8million was declared after taking into account amortization of customer relationships and brand values of £1.6million and finance charges of £700,000 sterling, as well as the impairment of goodwill of £1 million.
The group’s net bank debt at 30 June 2021 was £8.7 million, an increase of £8.1 million from its position at 31 December 2020 following an investment of £12.2 million. sterling in its acquisitions of GWP and Carters. The group said it was working well under its existing £30m bank facility, which runs until December 31, 2025.
His pension scheme was in surplus at June 30, 2021, compared to a deficit at December 31, 2020 of £1.5 million. Continued contributions from the Macfarlane Group and an increase in the discount rate, offset by lower investment returns over the period, are the reasons given for the improvement.
The board said it expects the group’s full-year 2021 outlook to be ahead of its previous expectations, despite challenges expected in the second half, including further inflationary pressure on commodity prices. inputs, continued supply constraints on most raw materials and increased operating costs due to staffing pressures.
The board recommends a 24.3% increase in the interim dividend to 0.87 pence per share payable on October 14, 2021 to shareholders of record as of September 17, 2021.
More than 1,000 employees Macfarlane Group’s share price jumped 16% to a 52-week high of 139.05p in early trading after the release of results this morning (August 26), but had fallen since stabilized slightly at 134.52p at time of writing.