27 August 2015- interim results
In the six months to 30 June, the packaging group Macfarlane has revealed that revenues rose by 12% to £78.6m (2014: £70.1m) although pre-tax profits increased by a more impressive 52% to £1.85m (2014: £1.22m). Both sales and profits have benefitted from good organic growth as well as the positive impact of the acquisitions made in 2014. This underlines the value of a well-executed acquisition strategy. Earnings per share for the period were 50% higher at 1.26p (2014: 0.84p) and the interim dividend was increased slightly to 0.53p (2014: 0.50p). The group continues to grow its presence in the internet retail sector where patterns of trade are more weighted towards the second half and this year is likely to be no different with sales and profits expected to be higher in the second half of the year. Net debt at the end of June was £11.9m, some £0.3m higher than at the end of June last year and this reflects the normal seasonal uplift in in working capital and the second half of the year should see this reduce. We remain confident that the company will achieve forecast pre-tax profits of £7.13m for the year as a whole for earnings per share of 4.5p. Although the shares have ticked up slightly since our recommendation last month at 46.125p, on a prospective p/e ratio of just 10.9x, they remain a BUY.