Macfarlane Group 2017 interim results
"Macfarlane Group has continued to perform well in the first half of 2017. Group sales of £89.8m, were 10% ahead of the comparable period in 2016 and profit before tax of £2.5m, was 27% higher than in 2016. The strong performance in the first six months of 2017, supplemented by the expected seasonal uplift from the e-commerce sector in the second half of the year gives the Board confidence that its full year expectations for 2017 will be achieved.
Packaging Distribution sales were 12% up on the first half of 2016, with 3% achieved from organic growth and the remainder from recent acquisitions, all of which are performing well. Gross margin in Packaging Distribution was similar to last year at 29.0%, (2016: 29.2%). Operating profit at £2.7m is £0.4m, 18% ahead of 2016.
Sales in our Manufacturing Operations are 1% below 2016 levels, principally due to our continuing programme of focusing on higher margin sales. Operating profit is £0.3m, 29% ahead of 2016.
After charging net interest of £0.4m, (2016: £0.5m), profit before tax grew to £2.5m (2016: £2.0m).
Net debt at 30 June 2017 was £14.6m, a £1.5m reduction from the level of £16.1m at 31 December 2016. The Group is operating well within its existing bank facility of £25.0m. Consistent with our normal pattern, Group trading is expected to be strongly cash generative in the second half of 2017.
The pension scheme deficit reduced to £13.4m at 30 June 2017 from £14.5m at 31 December 2016, mainly due to the payment of deficit reduction contributions during the six month period.
The Board is recommending an increase of 9.1% in the interim dividend to 0.60p per share to be paid on 12 October 2017 to shareholders on the register as at 22 September 2017. (2016: 0.55p per share)
Earlier this year I indicated to the Board, my intention to step down from the Chair by the end of 2017. Having been a member of the Board since 2004 and Chairman since 2012, I took the view that the time was right to make the change and to enable an orderly transition. The Nominations Committee's process to select a new Chairman is well advanced and the outcome will be announced in due course.
Our strategy is to deliver sustainable profit growth by focusing on added value products and services in our target market sectors, combined with the execution of value-enhancing acquisitions. Macfarlane Group's performance in the first half of 2017 reflects the successful implementation of our strategy and we are confident that the Group will continue to make further progress in the remainder of 2017."