Macfarlane Group said yesterday that its first-half, pre-tax profit more than doubled and it is confident it can cope with the effects of a general economic downturn.

Macfarlane Group said yesterday that its first-half, pre-tax profit more than doubled and it is confident it can cope with the effects of a general economic downturn.

For the first half to the end of June, the Glasgow-based packaging products manufacturer said its pre-tax profit from continuing operations rose to £989,000 from £453,000 last year, with revenues jumping to £64.4m from £57.4m.

Chairman Archie Hunter was upbeat about the firm's performance. He said: "The first half of 2008 was a period of further significant progress for Macfarlane Group as we continued to develop our core activities, doubling profits from our continuing operations in the process. This improvement was achieved despite significant supplier price increases across our businesses."

Hunter added: "The profits increase reflected a strong operating performance in our labels business, which benefited also from a strong euro and a good performance in testing conditions from our packaging manufacturing business."

Hunter said the group's commitment to focusing on core activities led to the decision last year to dispose of a plastics operations based in Ireland, adding that the disposal process to offload the unit is progressing.

"We have made provision for a net loss on discontinued activities of £0.7m including this item," he stated.

Peter Atkinson, Macfarlane's chief executive, told The Herald he is confident the company can weather the present economic downturn that shows signs of deteriorating into a recession as the group has a strong customer base and is striving to keep costs under control.

"We have a wide range of customers in a number of economic sectors," he said. "And we have taken some cost reduction measures."

Atkinson said the group aims to trim its fuel bill for its fleet of about 100 lorries by installing Paragon routing and scheduling software across its distribution network to increase efficiency and customer service.

The software, which costs £90,000, collates all its customers' delivery requirements and calculates the most efficient means of delivering the goods.

It checks approximately every 30 seconds to see where Macfarlane's trucks are located and what speed they are doing and will adjust the delivery time as needed. In early 2009, the system will send e-mails or text messages to customers notifying them when a delivery is imminent, and customers will be able to track deliveries online.

Macfarlane believes the system will lead to around a 9% reduction in its use of fuel and will increase its vehicle utilisation by 10%.

The company announced that it will pay an interim dividend of 1p per share on October 23.

Analysts were generally positive about the group's results. Alex McCambridge of Brewin Dolphin described them as "encouraging" in a note to investors.

He has a price target of 31.2p on the company's shares.

The good news on profits cheered the City and traders marked up Macfarlane shares by more than 7%, or 1.75p, to 26p.