Half-year results for packaging businesses are never going to set hearts racing, but what Macfarlane (MACF) might lack in flare it makes up in consistency. Its performance in the first six months of 2015 was particularly solid, with operating profit up 33 per cent to £2.3m. Management's confidence was reflected in a 6 per cent increase in the half-year dividend.
Macfarlane's strategy to buy smaller businesses in the geographically fragmented packaging industry is clearly bearing fruit. The two acquisitions made last year have been successfully integrated, according to management, and supported just over half of the 16 per cent year-on-year gain in sales for the packaging distribution division.
This should be further boosted in the second half by last month's £2.75m purchase of Nottingham-based One Packaging, which booked operating profit of £0.4m on turnover of £4.9m in 2014. And Macfarlane's consolidation strategy should prompt another acquisition in the second half of 2015.
Buying companies puts an inevitable strain on cash, although Macfarlane is comfortably within its debt facility and hopes to pay off some of its borrowings by the end of the financial year. Impressively, the group also found enough capital to reduce the pension scheme deficit by 13 per cent to £12.1m.
House broker Arden Partners is forecasting adjusted profit before tax of £7.1m and EPS of 4.5p for the full year, up from £6m and 4.1p in 2014.
MACFARLANE (MACF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 48p | MARKET VALUE: | £60m | |
| TOUCH: | 47-49p | 12-MONTH HIGH: | 49p | LOW: 35p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 24.7p* | NET DEBT: | 39% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 70.1 | 1.22 | 0.84 | 0.5 |
| 2015 | 78.6 | 1.85 | 1.26 | 0.53 |
| % change | +12 | +52 | +50 | +6 |
Ex-div: 8 Oct Payment: 15 Oct *Includes intangible assets of £33.8m, or 27p a share | ||||
