Protective packaging supplier Macfarlane Group described 2025 as a “challenging” year, marked by declining profitability amid high operating costs and weak demand.
The UK-based company’s group revenue rose 11% to £300.8m ($402.5m) from £270.4m in 2024.
However, operating profit fell to £12.5m from £23.6m in the previous year, while group adjusted operating profit decreased 28% to £19.7m.
In the packaging distribution segment, revenues remained largely flat at £229.2m.
Adjusted operating profit for the division dropped to £11.4m from £20.2m, driven by “weaker-than-expected demand”, intense trading pressure on margins, and higher labour and property-related costs.
Despite these headwinds, the business continued to invest in strengthening its management and sales teams throughout the year.
In the manufacturing operations segment, revenues climbed to £78.5m in 2025 from £47.5m in the prior year. This is driven largely by the acquisition of Polyformes in July 2024 and “stronger” demand from customers, mainly in the defence, space and aerospace sectors.
Adjusted operating profit in this division increased to £8.3m from £7.2m. Excluding last year's acquisition of Pitreavie, Macfarlane noted that the segment performed “well”.
Performance at Pitreavie, a Scotland-based protective packaging manufacturer and distributor, fell “well below” expectations due to the death of an employee at the site in October 2025 that disrupted operations.
Macfarlane acquired Pitreavie for a maximum cash consideration of £18m, including an earn-out of up to £4m over two years.
“During the year, we experienced economic headwinds and uncertainty, creating a particularly competitive trading environment and material increases in operating costs which, together with the impact of the Pitreavie incident, resulted in a marked impact on the group’s financial performance,” said Macfarlane chair Aleen Gulvanessian.
The company noted that a recently announced £1.2m investment in new equipment at Pitreavie is expected to restore the business to full operational capacity in the second quarter of 2026.
Looking ahead, Macfarlane expects markets and the competitive environment to remain “challenging” in 2026.
