PROTECTIVE packaging company Macfarlane Group has reported a profit increase of 19 per cent since 2016.

The Scottish-based firm achieved sales of £196 million in 2017, nine per cent ahead of the previous year. Profit before tax was £9.3m, 19 per cent ahead of 2016’s £7.8m.

Macfarlane said the trading performance continued the positive trends of recent years and the results were in line with market expectations.

Macfarlane is proposing a final dividend of £1.50 per share, bringing the total payout for 2017 to £2.10.

This is an eight per cent increase on 2016’s total dividend of £1.95.

Packaging distribution increased sales by 10 per cent to £171.8m, with three per cent achieved from organic growth and the remainder from acquisitions.

Gross margin in packaging distribution grew to 29.4 per cent (compared to 29 per cent in 2016), showing strong contribution from the Greenwoods business acquired in September last year.

This resulted in packaging distribution achieving a 20 per cent rise in operating profit to £9.4m.

The company’s manufacturing sales were £24.2m, a one per cent increase on 2016’s £23.9m.

Gross margin reduced from 43.8 per cent in 2016 to 40.7 per cent in 2017, mainly due to operational pressures in packaging design and manufacture. As a result, the company’s manufacturing division operating profit in 2017 was £0.7m, £0.2m below the 2016 result.

Following the share issue in September 2017 to support the Greenwoods’ acquisition, diluted earnings per share for 2017 increased by 13 per cent from £4.64 to £5.22 per share.

The business has experienced management changes over the last year. Graeme Bissett stood down as Chairman at the end of September 2017.

James Baird was appointed to the board as a non-executive director and chairman of the Audit Committee last month and brings with him financial experience both in the UK and Europe.

Mike Arrowsmith has indicated his intention to step down from the board later this year, having completed six years as a non-executive director.

Chairman Stuart Paterson said: “The 19 per cent increase in pre-tax profits in 2017 represents the eighth consecutive year of profit growth for Macfarlane Group. Group profitability in the year to date is ahead of the same period in 2017.

“Our strategy continues to be the delivery of sustainable profit growth by focusing on added value products and services in our target market sectors, combined with efficiency improvements and the identification and completion of value-enhancing acquisitions. This strategy, which continues to be refined, has served all stakeholders well in recent years and we remain confident that it will continue to do so. Macfarlane Group’s performance in 2017 reflects the successful implementation of this strategy and we are confident that the Group will demonstrate further progress in 2018.”