Macfarlane Group PLC
22 May 2000
Macfarlane Group PLC
AGM Statement
At the Annual General Meeting of later today John Ward, Chairman, of
Macfarlane Group will make the following comments:
'1999 was a year of challenge and change within Macfarlane Group.
Positive steps were taken to reverse the decline in profits in
previous years, build on the success of the restructuring carried out
in our Plastics Division in recent years, and the continued success
of our Labels Division. At the same time the Group has put in place
a structure and strong base to drive forward growth.
Quite apart from these internal challenges and changes, the market
remains highly competitive. In addition, the high value of sterling
has made export markets less attractive. Despite these pressures I
am pleased to report that the Group is responding positively. The
Group has made investments overseas, particularly in the United
States and in Eastern Europe to ensure a presence in overseas markets
to serve our customers. The performance in each of our Divisions
continues to be benchmarked against a range of comparator companies
and compares favourably with top quartile performances being achieved
in a number of cases.
Trading in our Merchanting Division remains strong with good top-line
growth despite competition in the market place. The Division
continues to outperform its competitors and its clear expertise in
distribution are vital to the Group's future development.
Our Packaging Division has made a good start to 2000 with year on
year improvements and continued strong demand from new customers in
the electronics sectors. Despite continuing raw material price
pressures in the first half of 2000, margins are being maintained.
Our American subsidiary, Western Foam, continues to trade well. The
management team is well advanced with the restructuring programme and
this will be completed by the half year within the cost levels
previously outlined.
Trading conditions in the Plastics Division have continued to be
competitive in 2000. The well-documented hardening of raw material
prices has continued and despite tough trading conditions in the
first two months, the Division has now returned to the upper quartile
levels of profitability that we would expect from its strong and
experienced management team. The division acquired Marpak Limited, a
small but profitable extruder and converter based in Leeds, for a
consideration of £2.25m. This acquisition is consistent with our
strategy of bolt-on acquisitions in place of capital expenditure to
expand the product portfolio in the division with new products which
achieve good levels of profitability.
Our Labels Division continues to respond well to all business
opportunities, providing the highest quality self-adhesive labels to
key customers in the United Kingdom. As previously indicated,
profitability is below the levels achieved in 1999, reflecting the
need to secure substantial long-term contracts from existing
customers, but still represents upper quartile performance of the UK
labels industry. The Division is currently participating in a number
of new customer initiatives to fuel top-line growth.
The Board remains confident for the future of Macfarlane Group.
There is a new and enthusiastic executive team in place and our
restructuring programme has progressed well. Sales continue to grow
in line with our expectations in spite of cost and competitive
pressures.
The cash position of the Group is strong, allowing the executive team
to make the necessary investment to support plans for organic growth
and take advantage of acquisition opportunities. As previously
outlined, our objective in reshaping Macfarlane Group is to produce a
company which has the capacity to provide shareholder value by
delivering double digit earnings growth. The Board's objective is to
meet performance targets and in spite of the competitive trading
conditions in the year to date we have not altered our expectations
for the year.'
Enquiries:
John M. Ward Chairman 0141 333 9666
Iain D. Duffin Chief Executive 0141 333 9666
John Love Finance Director 0141 333 9666
Press and Media:
Martin Cryans Beattie Media 01698 787878
Ann-marie Wilkinson Beattie Media 07730 415019
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