Macfarlane directors axe interim dividend after 'unacceptable' £6.8m pre-tax loss

Macfarlane told its shareholders yesterday it would not be able to pay them an interim dividend after the packaging company posted a dismal six months' performance.

The Glasgow-based company revealed it had made a £6.8m pre-tax loss for the past six months, compared with a profit of £700,000 in the first half of 2002.

"The performance has been unacceptable and much remains to be done. In light of the current operating performance, the directors do not consider it appropriate to pay an interim dividend," said Sir John Ward, the chairman of the company.

Macfarlane's has struggled in the past few years as the electronics manufacturing industry that it supplies packaging materials to has gone into decline.

Iain Duffin, the former chief executive, set about implementing a restructuring programme designed to boost profitability, but failed to carry it out quickly enough. He also oversaw the acquisition of three businesses, but integrating them into the enlarged group has proved more costly than at first planned.

Mr Duffin resigned in May, with Sir John becoming executive chairman. It has since been closing unprofitable sites, but this had a further impact on sales. Turnover fell 8.2 per cent to £66m and the company made an operating loss of £6.5m.

Shareholders last year received an interim dividend of 1.8p a share and a full-year dividend of 5p per share. Sir John warned that any dividend this year "is likely to be modest and will not exceed 2p per share".

Shares in Macfarlane yesterday fell 1p to 23p. They have slumped 28 per cent this year.

The company now expects trading in the second half to improve. Sir John was also hopeful yesterday that a new chief executive would be appointed in October. A candidate has already been selected and contract negotiations are now taking place.