Low & Bonar (LWB) still has some issues to resolve, but the specialist performance materials supplier made solid progress in the year to November 2016, selling off its low-margin artificial grass business, and moving towards an exit from its Saudi Arabia-based geotextile joint venture, Bonar Natpet.
Three of the remaining four divisions - building and industrial, civil engineering, and interiors and transportation - all delivered strong revenue growth, and the key operational highlight was the start of production at its Changzhou plant in China. Demand for products under the Colback brand was strong and the plant ended the year with capacity utilisation over 75 per cent. Full output is expected to be achieved this year, and there are plans for a second production line.
At 8.7 per cent, operating margins were held back by a weak performance in the coated technical textiles division, where operating profits were down by a third. Manufacturing problems have now been resolved, but this added £3.4m to costs and had an impact on sales. However, there are signs that trading will improve this year, with a new sales team focusing on higher-margin segments such as flexible containers.
Analysts at Peel Hunt are forecasting adjusted pre-tax profits of £34.7m for the year to November 2017 (from £29.2m in FY2016) and EPS of 7.1p.
| LOW & BONAR (LWB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 72p | MARKET VALUE: | £237m | |
| TOUCH: | 71-73p | 12-MONTH HIGH: | 73p | LOW: 55p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 60p* | NET DEBT: | 55% | |
| Year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 (restated) | 362 | 21.4 | 4.5 | 2.8 |
| 2016 | 400 | 25.9 | 5.2 | 3 |
| % change | +10 | +21 | +16 | +8 |
Ex-div:16 Mar Payment:13 Apr *Including intangible assets of £105m, or 32p a share | ||||
