From:Packaging News

Macfarlane Group has announced packaging distribution sales growth of 5.5% on 2015, with volumes comprising 0.5%, during the first half of this year.

The UK’s largest distributor of protective packaging said the growth was a result of new business wins, supported by the continuing contribution made by acquisitions, and that gross margin at 29.2% (2015 – 29.3%) reflected a competitive environment.
Group sales reached £81.5m, 3.7% ahead of H1 2015 and profit before tax was £2m – 8.1% ahead.

Macfarlane acquired One Packaging in 2015, as well as Colton Packaging Teesside and Edward McNeil, both acquired in H1 2016; these will be fully integrated into the business to improve efficiencies.

Additionally, Nelsons for Cartons & Packaging was bought in July and Macfarlane expects strong contribution in the second half of the year.

Speaking to Packaging News, Macfarlane chief executive Peter Atkinson said that the results were in line with expectations. The company’s packaging distribution division had benefited from the upturn in the e-commerce market and that more acquisitions were on the cards.

“Over the last two years we have made six acquisitions,” he said. “We have a pipeline for targets in place. In the next two to three years we plan to implement two to three aquisitions per year. It is fertile ground for us.”

On Nelsons, Atkinson said that the company’s specialism in shelf-ready packaging (SRP) took Macfarlane into a new sector and allows the company to extend Nelson’s service across the Macfarlane network.

He added that there was a slight rise in profits in its manufacturing division, which covers labels. Atkinson said that Macfarlane has been “engineering different solutions” for some of its customers and focusing more on its higher margin clients.

The ‘Brexit’ effect caused a slowdown in June and July but Atkinson added that it was “very difficult” to judge the impact of the UK’s vote to leave the EU in the long term.
Graeme Bissett, chairman of Macfarlane Group PLC, said: “Sales and profits both benefited from the positive impact of recent acquisitions, underlining the value of our acquisition strategy. Our increasing presence in the internet retail sector means that sales revenues are more weighted towards H2 and we expect to see the typical seasonal uplift in the second six months of the year. The Board remains confident that its full year expectations for 2016 will be met.”

He added that the strategy is to continue to deliver sustainable profit growth through focusing on added value products and services in key UK market sectors, combined with the execution of value enhancing acquisitions.

“The uncertain economic climate arising from the outcome of the EU Referendum is likely to continue for a considerable time and we will monitor developments and take appropriate action.  The performance of the business in the period to 30 June 2016 reflects the successful implementation of our strategy and we will maintain that focus in the period ahead.”