The company is aiming to significantly reduce its debt following a review of its operations by new chief executive Peter Atkinson who joined in October 2003. He now plans to go back to the basics of customer service, new business relationships and cost reductions.

That strategy is already bearing fruit, he said. The early signs are that this approach is beginning to have a positive impact with improving service levels, stability in the customer base, some early success in recovering lost customers and a number of major account wins pending.

The expectation for 2004 is significant performance improvements, said Atkinson.

Last year the group made redundancies and site closures reducing 45 local sites to 15 regional distribution centres. The reorganisation process cost Macfarlane 3.5m.

In 2002 Macfarlane saw a dramatic 90% plunge in profits for the first half of the year following a failed bid to takeover its much larger rival British Polythene Industries.

The companys preliminary results statement for this year will be issued on 29 March.

by Philip Chadwick