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LONDON (Alliance News) - Packaging company Macfarlane Group PLC Tuesday said that sales increased in the first four months of 2014, but warned that it does not expect increased demand throughout the year, and its trading performance for the first-half of the year is expected to be lower than the previous year.
The manufacturer and supplier of cardboard, plastic and bespoke packaging, said that it does not expect substantial help from increased demand in the UK in the year, and with volumes weighted on the second-half of the year, its results for the first-half of the year are likely to be below those achieved in 2013.
"Given the improvement in sales levels in 2014 to date and the actions being taken, the full year outlook remains in line with our expectations," said Chairman Graeme Bissett in an annual general meeting statement to shareholders.
Macfarlane said that group sales in the first four months of its new financial year were up 2.4% on last year, supported by a 2.5% increase in packaging distribution sales, and a 1.8% increase in sales in its manufacturing operations.
"Although this is not yet being fully translated into profit growth due to the impact of price competition, actions being taken to strengthen gross margin combined with new business momentum give confidence that the business will achieve both sales and profit growth for the full year," Bissett added.
The group said its Labels business is taking a hit from an increasingly competitive UK retail sector, although it said that investments in sales resource and infrastructure will result in a trading performance for its manufacturing businesses broadly in line with that in 2013.
Macfarlene said that with the support of new bank funding announced last year, it has recently concluded an agreement to acquire PSD Industrial Holdings Ltd, the owner of Lane Packaging Ltd, a Reading-based packaging distributor. It said the initial cash consideration for the acquisition is approximately GBP0.7 million, plus a deferred component of a maximum of GBP0.4 million, subject to certain trading targets being met in the year to April 30, 2015.
"Our acquisition strategy is focused on good quality businesses, which will enhance our geographic coverage and improve market penetration. We have a number of other potential opportunities which are currently active," said Bissett.
Shares in Macfarlane were down 2.6% at 47.75 pence Tuesday early afternoon.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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