Alongside its H1 financial results, packaging firm Macfarlane Group has announced that its chairman Graeme Bissett is to step down at the end of this year.
Bissett joined the Macfarlane board in 2004, stepping up to become chairman in 2012 and overseeing profit growth in every year of his tenure, during which Macfarlane has made its name in being shrewdly acquisitive.
He said: “Earlier this year I indicated to the board my intention to step down from the chair by the end of 2017. Having been a member of the board since 2004 and chairman since 2012, I took the view that the time was right to make the change and to enable an orderly transition."
He added that the Macfarlane Nomination Committee’s process to select a new chairman was well advanced and that the outcome will be announced in due course, before the end of this year.
Macfarlane chief executive Peter Atkinson paid tribute to Bissett and said he had been a “great leader for Macfarlane” during his tenure.
“At the end of the day a chairman’s job is to run the board, help the executive team develop their strategy and then support them in executing that strategy, and in both those areas he’s done an outstanding job,” said Atkinson.
The announcement coincides with the release of Macfarlane's half-year results for the six months to 30 June 2017, in which it posted a sales increase of just more than 10% on the same period last year, from £81.5m to £89.8m. Pre-tax profit rose by 26.6%, from £2m to £2.5m, while operating profit was up 19.5% to just shy of £3m. Its 2016 end-of-year results announced in February also saw increased sales and profits.
Atkinson said: “I think from our point of view it’s been a good six months, a number of key metrics are moving in the right direction, good growth in sales, growth in profits, reduction in net debt and reduction in the pension deficit and the effect that confidence gives to the board means that we’ve got the confidence to increase our dividend by 9% as well.”
Net debt fell from its 31 December 2016 level of £16.1m to £14.6m, while Macfarlane’s pension deficit also fell in the six months to £13.4m. The company pays £2.5m-£3m per year into the scheme with the intention of trying to eliminate it over the next 10 years. Diluted earnings per share were also up to 1.52p (2016 H1: 1.34p), an increase of 13.4%.
“The background to this performance is we have a clear strategy, focusing on organic growth particularly around the e-commerce sector – as we spend more on that area then that increases the need for packaging – and adding to that with high-quality acquisitions.”
Macfarlane is yet to acquire this year but Atkinson said the group is highly likely to have announced at least one completion by the end of 2017, having purchased Colton Packaging Teeside, Glasgow-based Edward McNeil and Leicester-based Nelsons for Cartons in 2016.
Within its two divisions, Macfarlane’s packaging distribution arm, which represents more than 80% of total sales, saw growth of 12%, with sales rising from £70m to £78m. Gross profit increased 10% to £22.6m (2016 H1: £20.5m), while operating profit increased 18% to £2.7m. 3% of growth was achieved from organic growth and the remainder from recent acquisitions, which Macfarlane said were all performing well.
Its smaller manufacturing operations division, which comprises its labels and its specialist packaging design and manufacture businesses, posted a sales fall of around 1%, from £13.7m to £13.6m, but operating profit increased sharply by 29% to £278,000 (2016 H1: £216,000).
Atkinson said: “Manufacturing is slightly down on last year but that is more of a planned sales strategy rather than something that is a major disappointment to us.
“Particularly in our labels business we are trying to focus on the higher-quality business, which has higher-quality margins, so to a certain extent we are letting lower-margin businesses leave and are growing in the higher-margin category.”
Setting out its stall for 2017 H2, Atkinson said the company expects a further sales increase, reflecting the growing proportion of internet retailers in its customer base as it moves towards the Christmas period.
Macfarlane's share price hit a three-month high of 67.25p on publication of the results.