Low & Bonar (LWB) has warned that its yarn business will make a loss this year, and while group profits will still be ahead of last year, they are expected to undershoot earlier expectations. Accordingly, analysts at Numis have downgraded their forecast for pre-tax profits by £1m to £24.4m, giving an EPS of 6.1p (2011: £23.4m/6p).
A further reduction in discretionary public funding for artificial sports pitches was blamed for the fall in orders, and management is evaluating its options for addressing the situation. But yarn sales account for just 6 per cent of group sales, and the company is very adept at keeping costs down.
Moreover, the geotextile joint venture in Saudi Arabia will be operational in the next six months, and a capacity extension project to meet continuing growth in the US flooring market will also be completed this year. Elsewhere, sales in the civil engineering and building products sectors have slowed after a strong first-half.
