MACFARLANE, the Scottish packaging group, has opted against a dividend at its annual general meeting and flagged an expected drop in demand levels of up to a quarter.

Stuart Paterson, group chairman, said after the scaled back Glasgow event that it had more than halved its bank debt since December and has significant headroom on its main facility up to £30 million.

The first quarter of 2020 delivered a group sales growth of two per cent and profitability “well ahead of the same period in 2019”.

Mr Paterson said: “We are managing our cost base in line with the reduced levels of activity and we would expect the second quarter to be a profitable period of trading albeit well below that achieved in the first quarter.

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“Following the introduction of lockdown by the Government, our customers in the hygiene, household essentials, medical and food sectors continue to demonstrate strong demand.”

Mr Paterson said: “These customers play a vital role in helping to meet the challenges of Covid-19 and we continue to support them.”

Sectors including automotive, aerospace and retail segments have been “materially impacted by the lockdown and their business has reduced significantly as a result”.

About a third of its 925 workers are furloughed and it has set up home working programmes, workplace distancing and enhanced hygiene protocols. Mr Paterson added “the board took the decision not to propose the final dividend at today’s AGM”, saving outflow by £2.8m. Shares were up 3.1% at 82.4p.