Low and Bonar goes down after disappointing second half performance
UK-based performance material company Low and Bonar said on Monday that increased prices for raw materials and more challenging market conditions in its civil engineering business led the firm to an unexpected loss.
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During its second of half trading, Low and Bonar's building and industrial business unit continued to perform as expected thanks to focussing more on niche market segments, and while the firm's interiors and transportation division posted strong sales as a result of its further expansion into China, the group missed the mark on its civil engineering wing despite, on a constant currency basis, its revenue being ahead of where it was the same time a year earlier.
Subdued demand for higher value specification projects resulted in an adverse sales mix for the unit, which said the expected improvements in financial performance and material reduction in inventory levels would no longer be achievable before the end of its financial year on 30 November.
"Therefore, Civil Engineering is now not expected to make a profit for the year as a whole. As such, management is reviewing the Civil Engineering business and will make an objective assessment as to its ability to reach and sustain the group's financial targets," Low and Bonar wrote in a Monday trading update.
However, despite the faltering civil engineering business, Low and Bonar's board expected to witness further growth across the rest of the group in what remained of the year's trading.
As of 1440 BST, shares had dove 16.24% to 66.80p.