It has been another period of deal-making for packaging specialist Macfarlane (MACF). In the first half, the group bought two new businesses, and a third after the period-end - partly financed by a public fundraising - which is expected to contribute to profits in the remainder of the year.
Newly acquired Colton Packaging and Edward McNeil made a strong contribution in the first half, helping to boost revenues and operating profit in the distribution division by 5.5 per cent and 9.7 per cent, respectively. This sector also continues to benefit from the increase in e-commerce, and sales from internet retail customers increased from 19 per cent to 22 per cent in the period. Revenue is expected to experience an upturn in the second half as online spending increases in the run-up to Christmas.
The manufacturing division, however, continued to experience the drag seen in 2015, with revenues down 9 per cent. This has been driven by the 19 per cent fall in sales at Macfarlane Labels, which provides its products to food producers. With demand dwindling as struggling supermarkets seek to cut costs, revenue has taken a hit. However, innovation in the form of new resealable labels is keeping the division in a comfortable position, according to chief executive Peter Atkinson.
Analysts at Arden Partners expect 2016 full-year adjusted pre-tax profits of £8.9m and adjusted EPS of 5.5p, up from £7.6m and 4.9m in the prior year.
MACFARLANE (MACF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 65p | MARKET VALUE: | £88m | |
| TOUCH: | 63-66p | 12-MONTH HIGH: | 69p | LOW: 43p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 23p* | NET DEBT: | 53% | |
| Half-yearto 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 78.6 | 1.9 | 1.3 | 0.53 |
| 2016 | 81.5 | 2.0 | 1.4 | 0.55 |
| % change | +4 | +8 | +7 | +4 |
Ex-div: 22 Sep Payment: 13 Oct *Includes intangible assets of £38.4m, or 28p a share | ||||
