Margins squeeze at packaging firm, Macfarlane Group

Macfarlane expects profits to be in line with expectations

A Glasgow-based packaging firm has said rising costs and a delay in passing them on to customers have hit margins.

However the Macfarlane Group said there had been an upturn in business in the last five months and profits would be in line with expectations.

Macfarlane which reported a 60% rise in pre-tax profits for the first half of the year employs 700 people at 22 locations mostly in the UK.

The group said it was still committed to reducing its pensions deficit.

It said while the recent rises in the equity markets had improved investment values in its final salary pension scheme, reductions in bond yields had offset most of this improvement.

Chairman Archie Hunter said: "Whilst we remain cautious over future demand levels and the pass-through of supplier price increases remains a considerable challenge, we have taken actions necessary to manage the situation and the board believes that the results for 2010 remain broadly in line with its expectations."