Low & Bonar upbeat as first-half profit falls 13%

Low & Bonar said it was expecting a “slight recovery” in sales in the second six months of the year, as it reported a 13% fall in first-half profit.

The materials firm posted pre-tax profit of £5.1m for the six months to 31 May, down from £5.9m for the same period last year. Year-on-year revenue was down 11.4% to £139.5m, compared with £157.5m in May 2008.

But the company said its results were “resilient” and it had seen an “encouraging improvement in sales patterns” in the second quarter.

Low & Bonar said it had cut costs by more than £10m over the period. The group has 12% fewer employees than this time last year and shorter hours have been introduced where possible, it said. Net debt in May stood at £98.7m, down from £208.2m in May last year.

The firm added that it was benefiting from diversification into new markets, notably the Middle East and Asia, where sales now make up almost 10% of the group total.

Duncan Clegg, chairman of Low & Bonar, said cost actions and raw material benefits would mitigate the impact of the low year-on-year volumes and that the board's full-year profit forecast remained unchanged.

He said: “With strong, well invested market positions and having focused on a number of cost and efficiency initiatives, the group is well placed to benefit from any further improvement in sales as and when economies around the world recover.”