Macfarlane (MACF) is realigning its business towards the e-commerce market and the medical sector. Strengthening online shopping volumes and a surge in demand from medical customers over the packaging specialist’s first half helped to largely offset declines in the aerospace, automotive and high street markets.
A promising first quarter was interrupted by the pandemic, which brought sales down by 5.2 per cent. Macfarlane is back on its feet with July revenues having exceeded last year’s levels, with August trending upwards too. But the company’s challenge lies in its key fourth quarter – think Black Friday and Christmas – during which, the fallout from a removal of government support and high unemployment could squash demand for packaging.
Macfarlane has accordingly increased its bad debt provisioning. While the company hasn’t followed peers in going cap in hand to shareholders yet, chief executive Peter Atkinson said that a number of shareholders have signalled their support for such a move. It is also cutting headcount in its design and manufacturing business by around a fifth, and has paused three acquisition deals, which it hopes to complete next year.
Broker Arden Partners forecasts full-year 2020 adjusted pre-tax profits and earnings per share of £11.1m and 6.1p respectively, rising to £14m and 7.5p in 2021.
| MACFARLANE (MACF) | ||||
| ORD PRICE: | 92p | MARKET VALUE: | £ 145.2m | |
| TOUCH: | 91-93p | 12-MONTH HIGH: | 117p | LOW: 61p |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 45p* | NET DEBT: | 33% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 108 | 3.83 | 1.99 | 0.69 |
| 2020 | 106 | 3.62 | 1.83 | 0.70 |
| % change | -2 | -5 | -8 | +1 |
| Ex-div: | 10 Sep | |||
| Payment: | 08 Oct | |||
| *Includes intangible assets of £61.9m, or 39p a share | ||||
