Thanks to a cost reduction programme and special attention to underperforming parts of the business, packaging solutions specialist Macfarlane Group (Glasgow / UK; www.macfarlanegroup.net) managed to improve its pretax profits by 60%, reaching GBP 723,000 (EUR 868,000) in the six months to 30 June 2010. Sales from continuing operations for the period improved 8.5% to GBP 64.1m, largely attributable to passing on a number of substantial price increases. Profit after tax and exceptional items leapt to GBP 1.4m from GBP 0.2m in the corresponding six months of 2009.

Chairman Archie Hunter said it was a period of further performance improvement in challenging circumstances. He noted, however, that not all price increases could be passed on immediately, so that the gross margin went down to 31.2% (H1 2009: 32.2%). The packaging distribution business improved turnover by 9% to GBP 51.3m, while the group’s manufacturing operations increased sales by 7% to GBP 12.8m and, in contrast to 2009, returned a small operating profit.

Macfarlane controls 20% of the UK’s packaging distribution business, effectively making it the market leader. The company said it does not expect demand conditions to improve in the second half of 2010 and intends to continue to focus on reducing costs and improving productivity to ensure that all 17 regional distribution centres are operating to their full profit potential.

Hunter added that second-half trading had started satisfactorily and additional sales growth is planned in order to enhance market share. The range of operational and strategic initiatives already being implemented should further improve financial performance and enable the business to deliver its full potential.

e-Service:
Macfarlane Group interim H1 2010 results as a PDF document