Packaging specialist Macfarlane Group (MACF) largely succeeded in maintaining its margins last year, despite rising raw material costs.
Gross margins were flat in Macfarlane’s packaging distribution division, despite experiencing a “significant increase” in corrugate prices over the past 18 months, according to chief executive Peter Atkinson. Accounting for those costs in its selling prices represented Macfarlane’s key challenge during the period, Mr Atkinson says.
Instead of passing all cost rises onto customers, the group strives to redesign and remove corrugate from its products, limiting the transfer of price increases to about 50 per cent. However, margins fell slightly in the manufacturing operations business, owing to now-resolved “operational pressures” in packaging design and manufacture, and “an adverse sales mix” in the labels business. Macfarlane is now focusing on higher-margin resealable labels, according to Mr Atkinson.
House broker Arden Partners forecasts pre-tax profits of £14.8m for 2019, giving EPS of 7.8p (2018: £13.5m, 7.1p).
| MACFARLANE GROUP (MACF) | ||||
| ORD PRICE: | 92p | MARKET VALUE: | £ 145m | |
| TOUCH: | 91-93p | 12-MONTH HIGH: | 114p | LOW: 68p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 40p* | NET DEBT: | 21% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 154 | 5.6 | 3.8 | 1.65 |
| 2015 | 169 | 6.8 | 4.4 | 1.82 |
| 2016 | 180 | 7.8 | 4.7 | 1.95 |
| 2017 | 196 | 9.3 | 5.2 | 2.10 |
| 2018 | 217 | 10.9 | 5.6 | 2.30 |
| % change | +11 | +17 | +8 | +10 |
| Ex-div: | 16 May | |||
| Payment: | 06 Jun | |||
| *Includes intangible assets of £59m, or 37p a share | ||||
