MACFARLANE Group has underlined the impact made by a spate of acquisitions as it lifted pre-tax profits by 15.4 per cent to £7.8 million.

The Glasgow-based company, which provides packaging solutions for retailers’ e-commerce arms, reported a seventh consecutive year of profits and revenue growth after a strong finish to the year.

It proposed a 7.1 per cent increase in its full dividend, to 1.95p per share. But investors sent the share price down by nearly five per cent, closing the day at 63.5p.

Macfarlane said organic sales in its dominant packaging distribution arm, whose clients include retailers such as Selfridges and Boots, ran into “challenging” conditions in the first half, before recovering as new customer wins kicked in. It said organic sales grew by three per cent in the second half after inching up by one per cent in the first six months of 2016.

Macfarlane, which lifted packaging turnover by nine per cent to £155.9m, highlighted the impact made by its acquisition of three companies during the year. It acquired English-based companies Nelsons, Colton Packaging Teesside and the packaging business of Edward McNeil.

Chief executive Peter Atkinson said Macfarlane will return to the acquisition trail this year.“We’ve built up a solid acquisition pipeline,” he said. “We only focus on quality businesses so it’s clearly around a pipeline of quality opportunities. We are planning to execute more acquisitions in 2017, probably more towards the middle, second half of the year.”

Elsewhere, Macfarlane said actions to rebalance its manufacturing operation towards higher margin products led to sales falling by nine per cent fall to £23.9m.

Mr Atkinson said the shift in emphasis of its labelling operation from self-adhesive to re-sealable labels for grocery items such as cooked meat and cheese began to bear fruit, with the move boosting its manufacturing profitability. But the specialist design element of its manufacturing operation, which makes high-value items packs for automotive and medical components, saw profits fall after a slow start to the year.

Mr Atkinson said the “net effect” was a fall in the operating profit of its overall manufacturing division to £900,000 from £1m in 2015.

Meanwhile, asked whether the shifting political backdrop was having any influence on trading, Mr Atkinson said it was too early to say what Brexit will mean. But he backed Macfarlane to continue its growth “whatever happens in the political environment.” And he said the outlook was brighter for customers that export in the oil and gas sector, thanks to the benefits brought by the weaker pound since the Brexit vote.

Mr Atkinson also underlined Macfarlane’s appetite to drive sales in Europe. The company formed a partnership with European packaging distributors Moonen and Boxon three years ago, called Novupak, to build sales for its customers in the Benelux countries, Germany and Scandinavia. So far, the partnership has generated £2m of sales.

Mr Atkinson said: “I think we will see, as we move into the future, Europe become an increasingly interesting part of our growth story.”