Low & Bonar (LWB) is finally starting to see the benefits of retiring chief executive Steve Good's efforts to reshape the group. The specialist materials group remains on track to achieve targeted sales growth at least 3 per cent above eurozone economic growth, together with operating margins of 10 per cent.
At the half-year stage, margins rose to 5.9 per cent, from 5.5 per cent a year earlier. They would have been higher still without the strength of sterling against the euro and the dollar, which trimmed group sales by £2.5m. But the currency headwind was offset by growth across most areas, notably in the technical coated fabric division, which sells advertising banners, awnings and marquees. The notable exception was in flooring, where bad weather in the US dampened demand.
Second-half trading is expected to show a further improvement, boosted by last year's acquisition of high-tensile soil reinforcement specialist Texiplast, which usually generates 80 per cent of its profits in the second half. A £26m factory built in China is also expected to become operational during 2016. This will help eliminate the so-called seeding costs - import taxes and transport - that the group currently pays to sell products in the country.
Analysts at broker N+1 Singer are forecasting full-year pre-tax profits of £29.1m and EPS of 6.3p (up from £26.1m and 6.1p in 2012-13).
| LOW & BONAR (LWB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 80.5p | MARKET VALUE: | £264m | |
| TOUCH: | 80.5-81.5p | 12-MONTH HIGH: | 96p | LOW: 63p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 55p* | NET DEBT: | 56% | |
| Half-year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 184 | 3.4 | 0.7 | 0.85 |
| 2014 | 196 | 5.2 | 1.1 | 0.95 |
| % change | +7 | +53 | +57 | +12 |
Ex-div: 27 Aug Payment: 25 Sep *Includes intangible assets of £110m, or 34p a share | ||||
