INTERIM profits at Macfarlane Group have surged by more than 50 per cent with the company signalling it remains on the hunt for acquisitions.
The Glasgow business said it had seen organic growth and benefits from acquisitions it made last year in growing revenue from £70.15 million to £78.6m in the first six months of 2015.
The rise in revenue, along with an exit from some lower margin manufacturing work, helped pre-tax profits increase by 52 per cent from £1.22m to £1.85m.
The interim dividend was increased by six per cent from 0.5p to 0.53p.
Chief executive Peter Atkinson said: “We are very pleased with the overall numbers.”
The larger packaging distribution business was the main driver of the growth in the period as it continued to make inroads into the internet retail sector with clients such as The Hut, Home Retail and Selfridges.
Mr Atkinson said: “We have a specialist team focused on that segment of the marketplace and they are constantly developing and delivering new opportunities for that side of our business.”
Revenue in packaging distribution rose from close to £57m to £66.29m with operating profit up from £1.5m to £2.05m.
Mr Atkinson signalled the business is already gearing up for Christmas.
He said: “We are working with our customers at the moment to plan activity to support them during that final quarter [of the year]. Certainly they are all indicating to us that their expectation is they will have a good final quarter and we will hopefully benefit from that.”
The manufacturing arm saw its revenue dip from £15.8m to £15m as it pulled back from some lower margin clients.
But operating profits edged up from £221,000 to £256,000.
Mr Atkinson said: “It is important for us in terms of underpinning our profitability that we don’t end up in battle just on price. We have held back from a number of opportunities to go down on price.”
The resealable labels business grew strongly in the US and UK but was softer in Europe. Mr Atkinson said the majority of sales for resealable is in food but Macfarlane has recently won mandates for dog treat products and pharmaceuticals.
Productivity at the company’s Kilmarnock plant, where it employs more than 100 people, was said to have improved from a new press which was installed last year.
Mr Atkinson said: “It is really about making sure in light of the competitive market conditions we are optimising our production capability within Kilmarnock.”
Finance director John Love said the businesses Macfarlane bought last year, Network Packaging and Lane Packaging, had both made a good contribution in the first half of 2015.
Earlier this month Macfarlane snapped up Nottingham based One Packaging for £2.75m.
Mr Love said the company has further deals in the pipeline.
He said: “You can never say exactly what the timings will be on those but we would like to do another small acquisition before the end of the year. If not then we would want to do something in the first half of next year.
“Most of what we are looking at is in [the packaging distribution] arena at the moment.”
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