Macfarlane Group publishes its 2024 Interim Results

INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2024

Resilient performance in the period; trading broadly in line for the full year

Aleen Gulvanessian, Chair of Macfarlane Group PLC, commented on the interim results: “As outlined in our AGM trading update in May, the challenging market conditions experienced in the latter part of 2023 have continued in 2024.

The management team has responded effectively through an improvement in new business growth, the management of price deflation and actions to control operating costs.  In addition, the Group continues to execute its strategy, making two further high-quality acquisitions.

The strength of our balance sheet and the cash generative nature of our business underpins our ongoing investment in actions to grow sales both organically and through acquisition and increase the interim dividend.

Despite market headwinds, our operational and strategic performance is progressing, and the Group is well-positioned to benefit as the macroeconomic outlook improves.”

• See note 2 for reconciliation of Alternative Performance Measures (before charging amortisation and deferred contingent consideration adjustments) to Statutory Measures.

Key Financial Highlights

• Group revenue reduced by 8% to £129.6m (H1 2023: £141.6m).
• Group profit before tax reduced by 3% to £9.7m (H1 2023: £10.0m).
• Group adjusted operating profit as a percentage of revenue improved to 9.7% (H1 2023: 9.1%).
• Basic and diluted earnings per share were 4.55p per share (H1 2023: 4.74p per share) and 4.51p per share (H1 2023: 4.70p per share) respectively.

Packaging Distribution

• Packaging Distribution revenue decreased by 11% to £110.9m (H1 2023: £124.0m)
• Continued weak customer demand and price deflation have been partially offset by the benefit of the acquisitions of Gottlieb in April 2023 and Allpack Direct in March 2024.
• Adjusted operating profit decreased by 1% to £9.3m (H1 2023: £9.4m) through effective management of input pricing and control of operating expenses.

Manufacturing Operations

• Manufacturing Operations achieved revenue growth of 6% to £18.7m (H1 2023: £17.7m).
• Contributions from B&D Group and Suttons, both acquired 2023, have been partially offset by price deflation.
• Adjusted operating profit decreased 5% to £3.2m (H1 2023: £3.4m) due to higher operating expenses.
• The acquisition of Polyformes completed in early July 2024 and will be earnings enhancing in H2 2024.

Group

• Effective management of working capital resulted in net cash inflow from operating activities of £14.0m (H1 2023: £20.3m).
• Net bank funds on 30 June 2024 of £0.8m – this reflects a cash inflow of £0.3m since 31 December 2023, after £3.6m of investment in acquisitions and £1.4m of capital expenditure. The Group is operating well within its bank facility of £35.0m which runs until 31 December 2025.
• The pension scheme surplus increased to £10.2m at 30 June 2024 (31 December 2023: £9.9m). The improvement is due to an increase in the discount rate, offset by lower investment returns in H1 2024.
• Interim dividend of 0.96p per share (H1 2023: 0.94p per share) – to be paid on 10 October 2024 to shareholders on the register as at 13 September 2024 (ex-dividend date 12 September 2024).

Outlook

The actions taken in H1 2024 and continuing through the remainder of the year should enable the performance of the Group to be broadly in line with market expectations for 2024.

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