SCOTTISH packaging company Macfarlane Group is aiming to more than double its annual sales to the internet retailing sector from about £23 million to £50m within the next three to five years, its chief executive has revealed.
Peter Atkinson unveiled the ambitious growth target at Macfarlane's annual meeting in Glasgow yesterday, as chairman Graeme Bissett said the company's profits so far in 2013 were "slightly ahead" of the same period of last year.
Shares in Macfarlane rose by 1.25p or 4.35% to 30p on the back of the positive trading statement.
Mr Atkinson told shareholders: "We expect 2013 to be another year of profit growth for Macfarlane Group."
Mr Bissett emphasised to shareholders that it was the intention of the board to "at least maintain" current dividend levels, even though the adverse impact of bond yields on the Macfarlane pension scheme deficit might in the future reduce distributable reserves from which dividends were paid.
Speaking after the annual meeting, Lord Macfarlane, who founded the company in 1949, welcomed this dividend commitment. He and his family own about 8% of Glasgow-based Macfarlane. Macfarlane's total dividend for 2012 is 1.55p-a-share.
Mr Atkinson highlighted the raft of online retailers to which Macfarlane supplies packaging, including US-headquartered giant Amazon, UK supermarket group Tesco, and Cumbria-based kitchenware and home and garden products retailer Lakeland.
He said Macfarlane had achieved about £1m of sales to Lakeland last year. And he cited the part Macfarlane could play in reducing internet retailers' costs, using its expertise in packaging design.
Shareholder Margaret Gray asked the Macfarlane board why there were no women among their number. She declared women "couldn't make a bigger mess" in financial matters than men had done in the last six or seven years, in an apparent reference to the banking crisis.
Mr Bissett told her, when Macfarlane was recruiting directors in the future, it would keep "diversity very firmly in mind at that time".
And he said: "Around one-quarter to one-third of our senior management team are ladies."
Mr Bissett said there had been "no material change" in Macfarlane's pension deficit since the end of 2012. During 2012, the pension deficit fell from £20.5m to £18.9m.
Mr Bissett told the annual meeting that revenue in Macfarlane's packaging distribution business so far in 2013 was 2% ahead of the same period of last year. He cited increased penetration of the UK third-party logistics sector, and increases in direct and indirect sales to internet retail customers.
He added that revenue in Macfarlane's manufacturing operations was slightly below 2012 levels. However, citing a focus on "added-value" products and services, he said profit margins in manufacturing had continued to improve and compared favourably with 2012.
Mr Atkinson cited competitive pressures in the market for self-adhesive labels, which are among the products manufactured by Macfarlane. However, he highlighted potential in the resealable labels market, noting Macfarlane had hiked its sales of such products by 28% in the US last year.
Mr Atkinson saw potential to grow sales of resealable labels in the US by 10% to 15% per annum in coming years. He also cited opportunities in this segment in the UK, which he noted was behind the US and mainland Europe in adopting resealable labels.
He noted the part which resealable labels could play in reducing food waste, and in saving consumers money in the current difficult economic environment.
He said Macfarlane already produced resealable labels for supermarket groups Asda, Morrison, Sainsbury and Tesco, as well as discount retailer Aldi.
Macfarlane, which employs about 180 people in Scotland and has a total workforce of more than 700, raised underlying pre-tax profits by 27% to £4.9m in 2012.
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