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LONDON (Alliance News) - Packaging firm Macfarlane Group PLC Thursday reported a flat pretax profit for its first-half and left its dividend unchanged, but said it is still confident in meeting its full-year expectations.
Macfarlane said it left its interim dividend unchanged at 0.50 pence per share, but said it expects group trading to be strongly cash generative in the second-half of 2014.
"Signs of growth in the economy are now more evident and our results in July and August to date are encouraging. Combined with our strength in the more seasonal internet retail sector, these factors should support the planned uplift in performance in the second half of 2014. Accordingly, the board is confident that our full year expectations will be met," said Chairman Graeme Bissett in a statement.
Back in May, the company said it did not expect substantial help from increased demand in the UK this year, and with volumes weighted on the second-half of the year, its results for the first-half of the year were likely to be below those achieved in 2013.
In its statement Thursday, the manufacturer and supplier of cardboard, plastic and bespoke packaging, posted a flat pretax profit of GBP1.0 million for the six months to June 30, level with its profit this time last year. Excluding exceptional costs in the period, its profit was still down on the previous year.
"Profit... was behind the level achieved in 2013 due mainly to margin pressure and our increased weighting in the internet retail sector where the trading pattern of customers is more highly focused towards the second half of the year," said Bissett.
The company did see an uptick in sales in the first-half, as revenue rose 3% to GBP70.1 million, up from GBP68.1 million in the first-half of 2013, buoyed by sales growth in its core packaging distribution business.
However, margins in that division were lower, hit by a competitive market, despite overheads being held at 2013 levels, while profit from its manufacturing operations slumped.
"This reflected lower sales in Packaging Design and Manufacture due to the absence of higher-margin project work, which benefited the first half of 2013 and margin erosion in our Labels business caused by the highly competitive conditions in the UK retail sector," said Bissett.
The group said that Lane Packaging, a Reading based-packaging distributor it acquired in May, is performing well.
Macfarlane shares were down 1.2% at 40.01 pence per share Thursday afternoon.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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