The groups total turnover was static, at 198m, while it turned last years pre-tax profit of 11.7m into a 1.4m pre-tax loss after taking into account 10.1m of exceptional costs.

But chairman John Ward said Macfarlanes performance for the year to 31 December was "creditable".

By the end of this year the group expects to complete the consolidation of distribution sites, which it decided to do after duplication arose from the acquisitions of National Packaging and A1 Packaging.

It will create a network of 15 regional distribution centres. It closed 12 sites last year and another 13 will shut during 2002.

Macfarlane is also looking to follow major customers as they move to lower-cost countries. The group already has a site in Hungary and Ward said there were "likely to be other opportunities" for similar operations.

The group is also in e-business trials, with implementation of an improved information system "progressing well", said Ward.

Last year Macfarlane sold off its plastics division to focus solely on packaging.

Story by Gordon Carson