Production problems at Low & Bonar

Of the three remaining divisions, coated technical textiles generates a third of group sales, although operating profits more than halved to £2.1m, reflecting higher raw material costs. But production problems also trimmed profits, and a move to reduce excess inventories led to some production stoppages. Consequently, of the goodwill allocated to the division, £13.3m has been recognised as an impairment charge.

And while sales grew by 5.3 per cent in the buildings and industrial division, underlying operating profits nearly halved to £3m mainly due to the cost of integrating the Enka business. Trading was also tough, with performance hampered by delays in passing on higher raw material and US freight costs in the face of greater competition.

On a brighter note, interiors and transportation pushed sales ahead by 10 per cent and operating profits by 2.7 per cent to £7.7m. However, extra capacity in the market and rising costs trimmed the level of improvement, putting pressure on margins.

Peel Hunt is forecasting adjusted pre-tax profits for the year to November 2018 of £25m and EPS of 5.3p (from £30.7m and 6.3p in FY2017).