Macfarlane set for second 2019 acquisition after 'solid' H1
Thursday, August 22, 2019
Macfarlane Group has seen a slight rise in sales for H1 2019 despite difficult conditions in certain sectors, and has eyes on another acquisition for the second half of the year.
Turnover increased year-on-year from £102m to £107.5m for the Glasgow-headquartered packaging giant, reporting an increase of 5.4% in its results released today (22 August). The increase has been attributed to growing sales in its packaging distribution business to £93m and its labels manufacturing wing, which is 21% higher year-on-year.
However, sales fell by 1.5% in the company’s packaging design and manufacture department, due to weaker demand from sectors such as automotive and high-street retail largely attributed to Brexit uncertainty.
Chief executive Peter Atkinson said: “There are some particular sectors in the UK market that have had softer demand for the first half of this year and we have been impacted because we have exposure to them, but as we are spread across of range of sectors we have been able to compensate.
“In terms of labels, we have got growth in resealable labels due to new contract wins and extensions to existing ones as resealable labels are beneficial to the environment by reducing food waste.”
Total turnover for packaging design and manufacture, and labels as a single manufacturing entity rose from circa £15m to £17.4m year-on-year.
Macfarlane continued its acquisition streak in the first half of the year with the acquisition of Aylesbury protective packaging distributer Ecopac, adding £6m turnover to the group. The firm’s integration is “progressive extremely well”, according to Atkinson.
Looking ahead, finance director John Love said the group was working towards a second acquisition for the year in H2 in order to keep up a consistent run.
He said: “We have got an established pipeline of potential acquisitions and we would like to do another in the second half of the year.
“Over the past few years, and hopefully over the next few, we would like to keep up a rate of a couple a year and, based on our pipeline, this is not unrealistic.”
According to Atkinson, Macfarlane is 8% ahead of last year and optimistic about the second half of 2019. However, the prospect of a no-deal Brexit hangs over the country and the group has been putting measures in place to make sure it is ready for the eventuality.
Of its 1,000 employees across 36 UK sites, Macfarlane employs 30 European nationals that it working with to prepare for any problems. It is also working on its own strategic stockholding for clients and that of its EU-based suppliers and doubled the capacity of its South West distribution facilities to do so.
In a bid to save on costs, the group is also looking to consolidate its property footprint. It is set to close its Enfield site in September while transferring South East operations to new premises in Harlow, while transferring other work elsewhere.
Love said the next step would be a focus on consolidating in the East Midlands, where it runs a number of sites, in late 2020.
Atkinson concluded: “Our plan for the rest of the year is a continuation of what we have already been doing with acquisition plans and organic growth.
“There will be no dramatic shifts to our strategy. We have a good team in place and a good track record based on sound strategy and we will continue to execute that.”