MACFARLANE Group, the Glasgow packaging specialist, has declared profits for the year to date are running of last year, while underlining its ambition to expand in Europe by acquiring firms based on the continental mainland.

The group, currently celebrating its 70th year in business, said sales have increased by seven per cent compared with the same period last year, with Brexit stockpiling helping to drive sales up in its manufacturing arm by 15%. Its packaging distribution business, whose customers include Dunelm, IKEA, Body Shop and Urban Outfitters, has grown sales by 6% so far this year.

Speaking at the company’s annual meeting in Glasgow, chief executive Peter Atkinson told shareholders that Macfarlane has opened talks with 15 companies across Germany and the Benelux countries as it targets acquisitions within Europe.

The owners of those companies are looking for “exit routes”, he said, reflecting the acquisition strategy it has followed in the UK in recent years. Macfarlane completed its latest acquisition earlier this month with a £3.9 million deal to buy Buckinghamshire-based Ecopac, which followed its purchase of English firms Tyler and Harrison in 2018.

Speaking later to The Herald, Mr Atkinson said the firm is “actively out there looking at acquisition opportunities in Europe”. That is being driven by increasing demands from clients looking to Macfarlane to provide is services in Europe, with the company also working on developing relationships with third-party logistics partners and suppliers, and local distributors.

Asked how close Macfarlane is to completing a deal, he noted that it would be unlikely to happen this year. It has typically taken two years from making initial contact with targets to concluding deals in the UK, and it is expected the process will take longer overseas.

Mr Atkinson said: “In Europe, because we have not got a name and a company that is known very well, that gestation period is just a lot longer. We are probably talking 24 months [from now], something like that.”

Mr Atkinson had told shareholders the company had put “robust” plans in place for Brexit, including modelling for a no-deal situation, and noted that the company already sources 90% of its supplies within the UK. It is liaising with the 33 EU nationals within its workforce to provide information on how Brexit will affect their status, declaring: “We are hoping to retain them.”

Mr Atkinson does not believe that a no-deal scenario is now off the table. While Brexit stockpiling has provided a boost to manufacturing sales, Mr Atkinson said it “seems to have dissipated now.” He added that Macfarlane is now stock holding for a customer in Germany in that country in case there is “any risk to the Border” as a consequence of Brexit.

Asked to sum up the mood among customers over Brexit, he replied: “No one, from our perspective, seems to be changing their decision making because of Brexit. They are just getting on with it, hoping for the best. And if it is going to be the worst, they have got plans in place, like we have, to ensure the worst is under some degree of control.”

All resolutions were passed at the annual meeting, though there was some rebellion over the remuneration report and remuneration policy. Nearly 13 per cent of the voted shares went against approving the remuneration report, with 8% opposing the remuneration policy. Beyond potential concern over the “visibility of the bonus schemes”, Mr Atkinson said he was unaware of any underlying reason behind the votes. He said he was aware two shareholders would be voting against the remuneration policy. Mr Atkinson received total remuneration of £440,000 last year.

The company said it is on course to meet expectations for 2019. Analysts are guiding on pre-tax profits of £12.35m, up from £10.9m. Shares rose by 4p to 107p.