The Courier & Advertiser (Fife Edition)
Low & Bonar shares slide on profit warning
TEXTILES: Manufacturer makes woven materials for carpet backing from its site at Caldrum Works in Dundee
Shares in textile group Low & Bonar tumbled yesterday as the textiles group issued a profit warning.
The company, which has a longstanding manufacturing facility in Dundee, said market conditions for the civil engineering side of its business would make a loss this year.
The group’s shares lost more than 15.6% of their value yesterday as the stock closed down at 67.25 pence.
The trading update, which covered the period since May 31, said the company was now reviewing the civil engineering side of the business.
It stated: “Market conditions for the civil engineering business remain challenging in the second half and while year on year revenue is ahead on a constant currency basis, demand for higher value specification projects remains subdued, resulting in an adverse sales mix.
“Consequently, the expected improvement in financial performance and anticipated material reduction in inventory levels in the second half will not be achieved.
“Therefore, civil engineering is now not expected to make a profit for the year as a whole.
“As such, management is reviewing the civil engineering business and will make an objective assessment as to its ability to reach and sustain the group’s financial targets.”
Earlier this year group chief executive Brett Simpson visited the Caldrum Works facility in Dundee and said the unit, which makes polypropylene woven materials for use in carpet backing, was making a positive contribution to the company. The Dundee unit employs 50 people, down from 80 last year following a restructure.
The trading update added that the group had made “good progress” overall with positive news from the other arms of the business.
It added: “The building and industrial business unit has continued to perform as expected during the second half, benefiting from a focused approach to niche market segments.
“End markets, particularly in North America remain positive and the board expects this business to show strong year-on-year progress.
“Interiors and transportation’s solid performance has continued through the second half.
“Strong sales growth in China, with increasing demand from local customers, has generated good returns from the Changzhou facility.
“Price increases implemented in the first half are also benefiting the second half performance.
“With operational issues in coated technical textiles now firmly behind us, work on rebuilding customer relationships and restoring margins is progressing, while recovering raw material cost increases.”