Achi news desk-
Macfarlane said the drop in sales in the first three months was predicted based on “exit trends” he had seen as 2023 drew to a close, with demand for packaging solutions from the e-commerce sector having reduced as retailers began charging consumers for returns.
But the company, which employs more than 1,000 people, said it expected its trading performance to improve in the second half, as customers began to feel more confident about the economic outlook. He kept his expectations for the whole year unchanged.
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Macfarlane completed the acquisition of Bury St Edmunds-based Allpack Packaging Supplies in March and expects to secure at least one further deal in 2024.
Speaking after the company’s annual meeting in Glasgow, where all resolutions were passed, chief executive Peter Atkinson told The Herald: “There are some sectors that are still a bit weak from our point of view, like retail e -trade especially where we deal. with customers in the clothing market. That tends to be a bit weak at the moment. Many of them have changed the way they do business as they now charge people for returns. And that has changed buying behaviour, which means they use less packaging than before.
“Why is it going to improve in the second half of the year? We are probably seeing some economic benefit starting to come through, a little bit more confidence in the economy. Secondly, we have a very, very strong pipeline of new business that is starting to come through, but the real benefit will come in the second half of the year.
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“Obviously we have had the benefit of acquisitions we make in the first half. we have made one, [we are] hope to make another one. Again we have benefited from them in the second half of the year. So we can see a formula of activity – not one thing but a number of different things – that will enable us to improve sales performance in the second half of the year.”
In a presentation to shareholders yesterday, Mr Atkinson emphasized the strong “pipeline” of acquisition opportunities available to the company in the UK and Europe. Macfarlane has averaged two or three acquisitions a year in the UK over the past eight to nine years and did its first deal in Europe with the purchase of German company PackMann in May 2022. Mr Atkinson said next year will be for it to be active in Europe again.
He said: “We’d be very disappointed if we didn’t do two [this year]. We’ve made one. We have one acquisition that has progressed very well and a couple of others that have not progressed so well, but could happen this year. I would be very confident of doing at least two [in the UK] This year. I have always said that Europe is more likely to be in 2025, so we are building on that. ”
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Asked whether it was harder to complete acquisitions in mainland Europe than the UK from a legislative perspective, Mr Atkinson said: “It’s not really legislative. We are only a known commodity in the UK. I can say to any company I talk to in the UK: look, if you want to check our qualifications, talk to company A, B or C that we have recently acquired and they will tell you how we deal with him. Obviously, in Germany, the Netherlands, Belgium, Scandinavia, wherever it is at the moment, we don’t have the same ability to refer to a reference point. In a sense we have to work harder, and also the gestation period is that much longer.”
He added: “We will complete two acquisitions [in the UK] This year. Already, after three or four months we must have turned down 12, so the market for private owners who want to leave the industry through retirement is strong.”
Macfarlane chairman Aleen Gulvanessian said: “When presenting our results for 2023 we noted that the challenging market conditions experienced in the latter part of 2023 would continue into 2024 and this has been the case. We expect some improvement in trading conditions in the second half of 2024 and have a clear plan of management actions to enable the Group to continue its progress.”
Shares closed up 9.86%, or 14p, at 128p.
