Business is tough in the world of packaging and labels, and sales at Macfarlane (MACF) were flat during the first half. Still, lower costs meant underlying operating profit, which excludes a big benefit from last year's deal with pensioners in its scheme, grew 11 per cent to £2.2m, and the second half is usually busier. A trio of deals with internet retailers, including ASOS, is also exciting.
Fierce competition hit prices at the core packaging business, offsetting a small increase in volumes, so profit there fell 6 per cent to £1.6m. But Macfarlane estimates new contracts with ASOS, Feel Unique and The Hut could generate £1m of sales in 2014, and substantially more if all goes well over Christmas. Macfarlane is only supplying ASOS with a few lines, but will surely do more once it has proved itself. Renegotiated property leases began to feed through in the first half, too, and driving more business online will keep costs low. Elsewhere, the smaller manufacturing division more than doubled profit to £626,000, driven by a small increase in sales and lower costs. Macfarlane is making more from sticky re-sealable labels, and there's a big opportunity in the mature US market. Europe, however, is catching up.
Broker Arden Partners expects full-year adjusted pre-tax profit of £5.4m, giving adjusted EPS of 3.6p (from £5.2m and 3.4p in 2012).
MACFARLANE (MACF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 33p | MARKET VALUE: | £37.7m | |
| TOUCH: | 33-34p | 12-MONTH HIGH: | 33p | Low: 19p |
| DIVIDEND YIELD: | 4.7% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 22p* | NET DEBT: | 29% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 68.0 | 2.96 | 1.89 | 0.50 |
| 2013 | 68.1 | 1.41 | 0.88 | 0.50 |
| % change | - | -52 | -53 | - |
Ex-div: 4 Sep Payment: 10 Oct *Includes intangible assets of £25.6m, or 23p a share | ||||
