Packaging company Macfarlane Group said it expected demand levels to fall by 20 to 25 per cent in the second quarter as the Covid-19 pandemic hit its business.
The Glasgow-based company recommended that no dividend would be paid at its AGM today.
Chairman Stuart Paterson said in the first quarter of 2020 the group had delivered a strong trading performance with sales growth of two per cent and profitability up as the company's 2019 acquisitions performed as expected.
The company acquired Leyland Packaging in September and Armagrip in January 2019.
He told the AGM: “We are managing our cost base in line with the reduced levels of activity and we would expect the second quarter to be a profitable period of trading albeit well below that achieved in the first quarter.
He said customers in the hygiene, household essentials and food sectors were continuing to show strong demand post-lockdown.
He said: “These customers play a vital role in helping to meet the challenges of COVID-19 and we continue to support them.
“All our sites remain operational, we are fully engaged with customers and offering an increasingly flexible service in response to their fast-changing needs.
“Some sectors we serve, such as automotive, aerospace and certain retail segments, have been materially impacted by the lockdown and their business has reduced significantly as a result.
He said that the company has introduced home working, workplace distancing and enhanced hygiene protocols and had furloughed about 30 per cent of its staff through the Coronavirus Job Retention Scheme.
He said: “The board wishes to express its gratitude to all Macfarlane staff for their commitment, support and flexibility in these challenging times.”
He said the company had a strong balance sheet with net bank debt which stood at £12.7 million at 31 December having been reduced to below £6 million. A total of £4 million of this had been achieved through tax deferrals, board salary reductions and bonus deferrals.
The decision to not to propose the final dividend would reduce cash flows by £2.8 million in the second quarter.
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