Revenues declined modestly, but underlying profits rose 26 per cent at Macfarlane (MACF) to £4.9m, demonstrating the strength behind the packaging group's strategy of cutting costs and focusing on the fastest-growing segments of the packaging sector, while demand remains relatively muted in the UK.
Growth in resealable labels and internet retail sales, as well as new customer growth in the United States, have done much to offset muted demand from traditional UK businesses over the past few years. Meanwhile, continued strong cash flow is funding a healthy dividend yield and allowing the company to pay down debt and pension liabilities.
True, investors may have hoped for a small increase in the dividend payment this year, as it has been held steady for the past two, but at least the current dividend is covered 2.4 times by 2012 earnings, so there is room for improvement further down the line.
Broker Oriel Securities forecasts adjusted EPS of 3.7p in 2013 and 3.9p in 2014 (from 3.5p in 2012).
MACFARLANE (MACF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 27p | MARKET VALUE: | £30m | |
| TOUCH: | 26-27p | 12-MONTH HIGH: | 29p | LOW: 17p |
| DIVIDEND YIELD: | 5.8% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 21p* | NET DEBT: | 28% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 131 | 3.70 | 2.56 | 2.00 |
| 2009 | 124 | 2.48 | 1.75 | 1.50 |
| 2010 | 135 | 4.20 | 2.63 | 1.55 |
| 2011 | 145 | 3.87 | 3.01 | 1.55 |
| 2012 | 142 | 5.91 | 3.69 | 1.55 |
| % change | -2 | +53 | +23 | - |
Ex-div: 8 May Payment: 6 Jun *Includes intangible assets of £25.7m, or 23p a share | ||||
