Low & Bonar on track despite rise in raw materials
Source - SMW
Low & Bonar's board continues to expect the group to show good progress overall for the year to the end of Nov.
The group said the building & industrial business unit continued to perform as expected during the second half, benefiting from a focused approach to niche market segments.
It said that end markets, particularly in North America, remained positive and the board expected this business to show strong year-on-year progress.
The group said it remained on track to complete the sale of the Lokeren based Agro-textiles operations.
An update continued: 'Interiors & 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.
'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.
'Raw material prices in the second half have been influenced by a number of factors, including the impact of the hurricanes in the US, and have remained at elevated levels rather than reducing as anticipated at the half year.
'Robust actions to recover this incremental cost through price increases have been taken in all business units along with cost saving initiatives, which have together reduced the impact on margins.'