Under-pressure Low & Bonar expects to make ‘small’ profit

Textile firm, which originated in Dundee, has seen its share price collapse in past year

Performance materials group Low & Bonar yesterday said it expected this year’s trading to be “in line with expectations” and profitable.

The group was originally founded as a jute merchanting business in Dundee and still has a carpet backing operation at Caldrum Works in the city.

The firm’s share price has collapsed in the past 12 months as the company struggles with its debt pile.

A year ago, Low & Bonar was trading at 47.75p a share. Yesterday the company’s share price closed at just 6.14p.

The update yesterday said: “The group expects to report results for the period in line with the board’s expectations.

“Further to previous announcements, group sales in the period were approximately 8% lower than the prior year.

“The group expects to report a small underlying profit before tax for the period.”

Earlier this year the firm announced a £54 million rights issue to tackle its debts.

Net debt at May 31 was approximately £99m, representing an expected net debt to earnings before interest, tax, depreciation and amortization (EBITDA) ratio of 2.9x and within the banking covenant of 3.5x.

Average net debt for the period was £135m.

The update added: “The disposal process in respect of the civil engineering division continues to be progressed.

“The recently announced sale of the construction fibres business is expected to close in early July, and the sale process for the needle-punched non-wovens business is still expected to conclude during the current financial year.”

The origins of Low & Bonar can be traced back to 1903. The firm sells to more than 60 international markets.

Low & Bonar will announce its six months results, for the period ended May 31, on July 30.

A worker at Low & Bonar’s factory in Dundee.