According to Macfarlane chief govt Peter Atkinson, the true take a look at of a enterprise comes when instances are robust. If an organization can do nicely in opposition to weak financial situations, rising costs and falling demand from clients, that enterprise is value supporting.
Atkinson is aware of of what he speaks. At the helm of this Glasgow-based packaging agency for 20 years, Atkinson has steered Macfarlane via downturns, crises and commodity cycles. Through all of it, he and his staff have delivered constant progress in income and dividends, conserving outdated clients completely happy, profitable new ones and controlling prices.
Macfarlane designs and sells packaging for a spread of companies, from retailers resembling Dunelm and Ikea, to industrial or healthcare giants resembling Siemens and Thermo Fisher Scientific.
Competition is fierce however Atkinson prides himself on working intently with clients, saving them cash by designing containers that match merchandise snugly and shield them. The group has additionally opened two innovation laboratories to make sure it leads on the packaging entrance.
This a part of the enterprise accounts for round three-quarters of its income. The relaxation comes from a producing division, which specialises in packaging for high-end, usually fragile, merchandise that want care – from eye-testing equipment to brake strains for plane.
Going locations: Macfarlane is increasing and has began to maneuver into Europe
Most Macfarlane clients are feeling the consequences of sluggish financial progress and shopper warning. This translated right into a 3 per cent fall in 2023 gross sales to £281 million. But the group nonetheless elevated its pre-tax income by 10 per cent to £26 million and lift the dividend by 5 per cent to three.59p.
Economic situations are enhancing however many companies stay involved concerning the future so Atkinson doesn’t count on a surge in demand any time quickly. He is optimistic, nonetheless, anticipating to ship continued progress by investing in innovation, working intently with clients and pursuing new ones in resilient markets resembling aerospace.
Acquisitions increase returns too and final week, Atkinson unveiled his newest buy, East Anglia-based Allpack, for a worth of £3.25 million. More offers are possible, each right here and throughout the Channel. Macfarlane earns most of its cash in Britain however has began to maneuver into northern Europe.
Brokers count on a small enhance in gross sales and income this yr, accompanied by an increase within the dividend to three.8p. Longer time period, Atkinson is deeply bold, eyeing up group gross sales of £500 million over the subsequent few years.
Midas verdict: Midas first really useful Macfarlane in 2012, when the shares have been 27p. By 2019, they have been 92p and immediately they’re £1.34. Founded 75 years in the past from a single room in Glasgow, the enterprise now employs greater than 1,000 folks and is a prime participant in its area. Showcasing British resilience at its greatest, Macfarlane has proved it could ship for shareholders. A sturdy, long-term funding.
Traded on: Main Market Ticker: MACF Contact: macfarlanegroup.com