A Glasgow-based packaging giant has seen profits tumble during a “difficult year” for the company.
Macfarlane Group saw adjusted operating profits before tax slide by 28% to £19.689 million for the year ended December 31 – in line with market expectations.
The fall in profits was attributed to major disruption at the company’s Pitreavie factory in Cumbernauld following a tragic incident that led to the loss of a member of staff in October, alongside headwinds faced by its dominant packaging distribution business.
However, Macfarlane saw its overall revenue increase by 11% to £300.8 million as its manufacturing operation enjoyed increased demand from the aerospace, defence, and space sectors.
Macfarlane, which was founded as a commercial stationer by the late Lord Macfarlane of Bearsden shortly after the Second World War, confirmed today that the Pitreavie incident remains under investigation by the authorities. The company, which is continuing to provide support to those affected by the incident, has invested £1.2 million in new equipment at the plant. The site, which saw operations temporarily suspended following the incident, is expected to return to full operational capacity in the second quarter of this year.
Macfarlane acquired The Pitreavie Group in a deal worth up to £18m in January last year to strengthen its position in Scotland. Prior to the incident, it had expected Pitreavie to be a “significant contributor” to the group in 2025.
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The Pitreavie business supplies Scottish food and drink companies such as Grahams The Family Dairy, Taylor Snacks and Albert Bartlett, as well as solutions to organisations like engineering giant Halliburton from its site in Aberdeen.
Speaking to The Herald today, Macfarlane chief executive Peter Atkinson said that “clearly we have gone through a very difficult trading period”.
“The market is in a degree of flux at the moment, so that’s impacted our results,” he said. “And then obviously in the final quarter we had the impact of the tragic incident at Pitreavie.
“So, in a sense our year really has been those two things that have driven the performance during the year.”
Mr Atkinson added: “We only bought Pitreavie at the beginning of the year, so the profitability we expected from that business just disappeared because of the incident."
The Pitreavie incident came as Macfarlane’s core packaging distribution business faced a variety of headwinds which continue to be felt in the current financial year. The company is planning to cut 50 jobs as it targets cost savings during what it anticipates will be a "challenging" year in 2026, which it expects to achieve through a combination of natural wastage and redundancies. None of the job cuts will be in Scotland. Macfarlane currently employs 1,244 people at 43 sites around the UK, Ireland, Germany, and the Netherlands.
Macfarlane said demand from customers was weaker during 2025 than expected, with clients delaying decisions amid concern over costs. The packaging distribution arm, which generates around 20% of its business from the retail e-commerce sector, saw margins come under pressure from a “more intense” trading environment and increased labour and property costs.
Adjusted operating profits at the division fell by 44% to £11.373m, as turnover rose marginally to £229.15m from £228.763m.
However, Macfarlane highlighted a more encouraging performance by its manufacturing division, which saw increased demand from the defence, aerospace, and space sectors. Revenue at the division, which designs and manufactures bespoke protective packaging solutions, surged by 65% to £78.47m, lifting adjusted operating profit by 15% to £8.316m.
Asked to comment on trends in packaging distribution, Mr Atkinson said customers are asking for solutions that minimise the use of packaging after bills arising from new extended producer responsibility regulations began to land. Retail and e-commerce customers are also requesting that the “most sustainable materials” are used in the packaging they purchase.
Mr Atkinson said: “A lot of work is going on at the moment with customers in retail and e-commerce around how they can use less packaging and, in the packaging they use, how can they make sure it's made with the most sustainable materials.
“And then in the industrial markets, it's really how can we minimise the amount of damage that's occurring in the supply chain.”
Commenting on the outlook for 2026, Mr Atkinson declared that “I can’t honestly say to you that the environment has changed that much”.
He observed: “We’re still seeing very similar features to what we saw last year. Customers are just very uncertain about a) what’s happening in the wider world and b) what’s happening with their customer base linked to the economy.
“I think we’ve got a very strong pipeline of new business, and one of our disappointments in 2025 was that that didn’t come to fruition as we expected it to do. So we are a little bit more enthusiastic and optimistic that this year we will bring on board some of those customers who have been delaying decisions.”
Macfarlane has over recent years regularly leaned on acquisitions to drive growth. But the company today ruled out any further deals in the short term. Mr Atkinson said the company’s immediate priorities are to “get Pitreavie back to where we expected it to be” following a year of “real turmoil” since acquiring the business in January last year, and improving the performance of its packaging distribution business.
“That doesn't mean to say we're not still courting [acquisition] opportunities, but in terms of executing anything, we're very unlikely to do anything in 2026,” he said. “[We will] probably [be] back on the acquisition trail in ‘27, ‘28.”
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