SHARES in Glasgow-based
Macfarlane Group (Clansman) rose more than 6% yesterday, after the packaging company announced much better-than-expected annual profits.
The lucrative integration of
Macfarlane's manufacturing and merchanting operations allowed founder Lord Macfarlane to delight the City one last time.
Macfarlane shares put on 8.5p to 142.5p, after the company announced a 7.5% rise in pre-tax profits to #22m for the year to end-December.
Lord Macfarlane will relinquish his chairmanship at the group's annual meeting on May 26.
He will remain as a non-executive director for another year, completing 50 years of service with Macfarlane, and will thereafter become life president.
Lord Macfarlane declined to be drawn on whether he thought the group would meet its long-established target of doubling profits to #25m over the five years to 1998. It was well on track, until a 3.8% reversal in profits during 1996 caused partly by destocking in the whisky industry.
Andrew Paisley, analyst at stockbroker Sutherlands, is maintaining his #24.5m forecast.
Last year's results were much better than the #20.5m he expected, and were achieved in spite of tough trading conditions.
The move to ensure that merchanting operation Abbott's
Packaging secures more of its products from within the group means Macfarlane locks in profit margins from both manufacturing and selling.
Lord Macfarlane outlined plans to double the turnover of Abbott's to #100m within five years through organic growth and possibly acquisition and added: ''Abbott's is, in a lot of ways, the key to future success.''
Macfarlane also aims to double the proportion of Abbott's' purchases sourced internally to 40%.
He pointed out that Hertfordshire-based Amalgamated Plastics, acquired by Macfarlane in February last year, was the only British producer of bubble wrap and that Abbott's was now able to source this from within the group. He said the benefits would come in the current year.
Lord Macfarlane claimed the group was unique in the packaging industry because it had substantial manufacturing and merchanting operations.
He added that any acquisitions in the immediate future were ''almost certain'' to be in merchanting.
Abbott's supplies everything from brown paper and twine to packaging for missiles for the Ministry of Defence.
Macfarlane's profits advance was achieved in spite of #1.5m of restructuring costs relating to Amalgamated Plastics and the integration of ACW, which was in Aberdeen, into Daniel Montgomery, the Macfarlane subsidiary which is based at
Kirkintilloch, near Glasgow, and produces bottle closures.
And a #712,000 net interest charge contrasted with the net #560,000 of interest and similar income received by Macfarlane the previous year.
Macfarlane's M500 non-refillable fitment, which prevents the unscrupulous refilling of whisky bottles with tea or water, is proving particularly popular in Eastern Europe.
On the downside, pre-tax profits from Macfarlane's plastic moulding division fell from #4.77m to #4.35m.
But profits from packaging rose from #14.5m to #15.7m and income from industrial film jumped from #1.16m to #1.88m.
Macfarlane is raising its total dividend by 10% to 4.50p with a final pay-out of 2.95p. It has raised it in every year since
floating in 1973.
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