MACFARLANE Group, the Glasgow-based packaging specialist, has said it expects the Brexit vote to hit demand and is prepared to cut jobs if those fears are realised.

However, chief executive Peter Atkinson said the company has not seen any material impact on sales to date and it expects to return to the acquisition trail next year.

Announcing an eight per cent increase in interim profits, Macfarlane made clear the vote for the UK to leave the European Union had created unwelcome complications for a firm which has benefited from a period of growth in the economy.

The company supplies protective packaging and labels used in a wide range of sectors, meaning its trading fortunes will be linked to the overall state of the economy.

Macfarlane said the uncertain economic climate arising from the outcome of the EU Referendum is likely to continue for a considerable time.

“The key impact of the EU referendum is that there is a likelihood that we will experience slower demand as well as potentially higher input prices for those items purchased from non-UK suppliers,” said the company.

It added: “If demand is not maintained at normalised levels then we would take positive steps to adjust our cost base accordingly.”

Asked what measures Macfarlane might take to reduce costs Mr Atkinson said: “If we see that demand does slow we would slow down hiring, not replace leavers, that sort of thing.”

He said there could be a small level of redundancies but nothing material.

The comments will lend weight to fears that the fallout from the Brexit vote could weigh on the labour market for some time.

However, Mr Atkinson said the Brexit vote had not had a big impact on trading to date. Demand softened in the run up to the referendum and the first weeks after the vote but has recovered “quite nicely” in August.

Macfarlane said it expects to be able to recover any increases in import costs from the market, indicating trading conditions are good.

The company said it has developed a strategy which has delivered profitable growth with a focus on markets such as internet retailing and logistics. It expects 2016 to be a successful year.

Macfarlane sees big opportunities to make useful acquisitions in what is a fragmented sector.

It bought two firms in the first half, including Glasgow-based Edward McNeil. Both have performed well. Last month it bought Leicester-based Nelsons for Cartons and Packaging for £6.75 million.

Mr Atkinson said the company has identified a range of further acquisition targets. It is in talks about potential deals and expects to complete at least one next year.

Mr Atkinson said the Brexit vote is “certainly not going to slow down that programme at all”.

He noted the company raised £5.6m from shareholders net of expenses in July in a placing completed at 58 per share that was well supported.

Shares in the group closed down 6p at 57.5p yesterday following a good run.

Asked about the recent £261m takeover of Glasgow-based British Polythene Industries by RPC Group Mr Atkinson said Macfarlane did not feel any more vulnerable than it had done before the deal.

Macfarlane made £2m pre tax profit in the six months to 30 June, up from £1.85m last time.

Sales increased around four per cent, to £81.5m from £78.6m.

The company increased the interim dividend by 6.3 per cent to 1.34p per share from 1.26p.

It employs 34 people in head office and distribution functions in Glasgow and 90 in the labels business in Kilmarnock. The group employs 780 people in total, mainly in the UK and Ireland.