Macfarlane Group has reported that revenue from continuing operations grew by 10% versus 2021 to £290.4m.
The Glasgow-headquartered provider of protective packaging's preliminary results for 2022 also revealed that profit before tax from continuing operations rose by 7% to £19.9m.
The group's packaging distribution arm achieved revenue growth of 8% from £239.5m to £259.7m year-on-year, through the recovery of input prices and the benefits from the acquisitions of Carters Packaging in March 2021 and PackMann in May 2022, which offset reduced demand from e-commerce customers.
Gross margins are stable at 32.1%, down marginally from 32.4% in 2021, reflecting effective recovery of input price inflation.
Operating profit before amortisation only increased by 1% to £19.9m, due to cost increases, particularly start-up costs related to the new north west of England distribution centre, as well as strategic IT investments and inflationary pressures in labour, energy and logistics.
The manufacturing operations side of the group delivered saw revenue growth of 23% from £25m to £30.8m, while operating profit before amortisation rose 42% from £3.7m to £5.2m.
GWP, acquired in February 2021, continued to perform well, while the Macfarlane Design and Manufacture business benefited from recovery in the aerospace sector and the strengthening of its partnership with packaging distribution.
The group sold its labels business in December 2021 and this has been classified as a discontinued operation. Labels recorded a loss before tax of £100,000 in 2022, related to finalisation of completion accounts.
Net cash inflow from operating activities of £18m was down from £23.8m in 2021 reflects the timing of payments at the year end to suppliers and higher 2021 employee incentive payments paid last year.
Net bank debt on 31 December 2022 was £3.4m, a net cash outflow of £5.9m from 31 December 2021, including £8.7m of investment in acquisitions and a higher level of capital expenditure at £3.3m, related primarily to the fit-out of the new distribution centre.
Macfarlane commenced a programme to electrify our fleet of delivery vehicles during 2022, continued to introduce solar panels at its various sites, and worked with customers to move to more sustainable plastic products.
The pension scheme surplus increased to from £8.3m to £10.2m at the end of 2022 due to continued contributions and an increase in the discount rate offset by a decline in the value of investments during the year.
The board is proposing a final dividend of 2.52p per share, up from 2.33p per share in 2021, which would take the total dividend for 2022 to 3.42p per share - up 7% year-on-year.
Group chair Aleen Gulvanessian commented: "Our performance in 2022 was achieved against a background of a marked slowdown in spend from the e-commerce sector, following strong growth during the 2021 Covid-19 lockdown periods, and inflationary pressures on operating costs.
"We anticipate that 2023 will be another challenging year, with uncertainty over the impact of the increase in the cost of living on customer demand, rising operating costs, particularly related to labour and energy, and increasing interest costs.
"Despite these challenges, with the effectiveness of our strategy, the resilience of our business model and the experience and commitment of our people, we expect Macfarlane Group to continue to deliver further growth in 2023."
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