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LONDON (Alliance News) - Macfarlane Group PLC Thursday reported higher pretax profit for 2014, driven by higher sales in its packaging distribution business, and said it expects improved market conditions in 2015.
the company, which makes, designs and distributes packaging and labels reported a pretax profit of GBP5.6 million for 2014, up from GBP4.7 million in 2013, as revenue rose to GBP153.8 million from GBP143.9 million. Its closely watched pretax profit before exceptional items rose to GBP5.6 million from GBP5.1 million.
It said it will pay a final dividend of 1.15 pence, bringing the full-year dividend to 1.65p, up from 1.60p in 2013.
Sales rose 9% to GBP1.26.9 million in its packaging distribution business, buoyed by 4% organic growth and growth from acquisitions. That translated into 16% growth in operating profit before exceptional items for the unit to GBP5.8 million. It said it had been particularly successful in expanding its business with internet retailers, and had increased penetration in national accounts thanks to its acquisitions of Lane Packaging and Network Packaging.
The packaging design and manufacture business within its manufacturing division had another strong year, it said, but its labels business was hit by the challenging conditions in the UK retail sector. This meant sales for the unit as a whole dropped to GBP26.9 million, from GBP27.6 million, and a lower gross margin in the labels business meant operating profit before items fell to GBP0.9 million, from GBP1.3 million.
"The board remains committed to seeking out further profitable expansion opportunities through carefully selected acquisitions. The positive sales trends seen in the final quarter of 2014 have continued into 2015 and the group is well positioned for further growth in 2015," Chairman Graeme Bissett said in a statement.
The Glasgow-based company said its bank debt stood at GBP10.1 million at the end of 2014, up from GBP5.9 million a year earlier, due to the two acquisitions it made last year.
It also said it is continuing to take steps to reduce the Macfarlane Group pension scheme deficit, and made a GBP2.5 million one-off contribution in 2014. This helped offset the impact of lower bind yields on the deficit, which fell to GBP13.9 million by the year end, from GBP15.9 million at the end of 2013.
Still, Macfarlane Group shares were down 1.3% at 40.22 pence Thursday morning. The stock is up 3.3% so far in 2015.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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