Glasgow’s Macfarlane Group warns of unanticipated ‘challenges’ from Middle East conflict

In a trading update to tie in with its annual shareholder meeting, the group told investors that profit in the first quarter was in line with its expectations but, as anticipated, behind the same period in 2025 due to the temporary outsourcing of manufacturing at Cumbernauld-based Pitreavie and restructuring actions taken at its distribution business.

The group’s performance is expected to improve in the second half of the year as it builds on organic revenue growth momentum, while benefiting from the installation of new equipment at Pitreavie and a tight control over operating costs.

It noted that management was taking actions to mitigate the “significant inflationary impact” on input prices and logistics costs caused by events in the Middle East.

Chairperson Aleen Gulvanessian said: “Following a difficult year in 2025, our main focus for 2026 has been to commence the process of profit recovery. It is encouraging therefore that the group’s performance in the first quarter of 2026 has been in line with expectations.

“We welcome the early signs of organic revenue growth in our distribution business, the resilience in our manufacturing businesses and the investment in Pitreavie which will enable that business to restore profitability in 2026.”

She added: “The impact of events in the Middle East will present market challenges not anticipated at the start of the year. However, the management team is taking appropriate actions to address these challenges and achieve progress in 2026.”

Net bank debt at the end of March stood at £16.7 million, compared to £16.2m at the tail end of 2025. The group said it continued to operate “well within” its £40m banking facilities and related covenants, which are committed until November 2028.

In February, Macfarlane warned of a “challenging” year ahead after its annual operating profit almost halved.

Chief executive Peter Atkinson said at the time that the firm would be doubling down on costs through “targeted” savings. It is expected that the 720-strong headcount at the group’s distribution business will fall by about 50 during 2026, through redundancy and natural wastage. None of the job cuts will be north of the Border.

While group revenue rose by 11 per cent to £300.8m in 2025, the full-year results showed that operating profit slumped to £12.5m, down about 47 per cent on the £23.6m banked a year earlier. At the pre-tax level, profits slid 61 per cent to just over £8m.

Operations were affected following a fatality at a corrugated manufacturing facility that Macfarlane acquired as part of its takeover of Pitreavie Group in early 2025. The incident led to a temporary suspension of operations at that plant.

Macfarlane Group has been listed on the London Stock Exchange since 1973 and has been operating in the UK packaging industry for some 75 years. Headquartered in Glasgow, the firm employs some 1,200 people at more than 40 sites, chiefly in the UK, as well as in Ireland, Germany and the Netherlands.