Performance materials specialist Low & Bonar (LWB) was restructured into five global business units last year, the benefits of which are already starting to emerge despite a challenging market.
The company's return on capital employed rose from 11.4 per cent to 12 per cent, while operating margins moved up from 7.7 per cent to 8.3 per cent. Sales and profits on the building and industrial side grew strongly, as they did with sports and leisure, helped by good demand from North American markets. Interior and transportation also performed well on the back of favourable price movements in raw materials, but suffered from capacity constraints, and the group invested £23m on additional capacity including a new production site in China. Operating profits rose by almost a tenth on a constant currency basis, although this was trimmed to a gain of 3.5 per cent by adverse currency movements, specifically weakness in the euro.
The bottom line was hit by a £1.8m loss at the joint venture in Saudi Arabia, where low demand and surplus capacity were much to blame, and the group booked an impairment charge of £8.2m.
Analysts at N+1 Singer are forecasting adjusted pre-tax profits for the year to November 2016 of £27.8m and EPS of 6.2p, from £26.3m and 5.7p in FY2015.
| LOW & BONAR (LWB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 65p | MARKET VALUE: | £214m | |
| TOUCH: | 64.3-66.3p | 12-MONTH HIGH: | 76p | LOW: 49p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 38 | |
| NET ASSET VALUE: | 50p* | NET DEBT: | 59% | |
| Year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 389 | 23.4 | 6.5 | 2.1 |
| 2012 | 381 | 6.1 | 0.5 | 2.4 |
| 2013 | 403 | 16.7 | 3.7 | 2.6 |
| 2014 | 411 | 16.7 | 3.5 | 2.7 |
| 2015 | 396 | 12.4 | 1.7 | 2.78 |
| % change | -4 | -26 | -51 | +3 |
Ex-div: 17 Mar Payment: 14 Apr *Includes intangible assets of £90m, or 27p a share | ||||
