Performance materials manufacturer Low & Bonar yesterday blamed Europe’s long winter and washout spring for a £2.3 million drop in pre-tax profits.
The company said an extended period of “abnormal weather” had severely impacted upon its Bonar division with sales of textiles to the civil engineering, building products and agricultural sectors which account for 80% of overall sales in the company’s largest single operating unit down 10% year-on-year.
Overall sales in the division dropped 5.3% on a constant currency basis in the six months to May 31, and margins also declined from 8.6% to 6%.
Operating profits were down by £3.2m.
However, the company which started out as a Dundee jute merchant a century ago made up some of the lost ground by progress in other divisions of the group, with the technical coated fabrics division enjoyed a £400,000 uplift in operating profits to £3.9m.
L&B’s yarns business, which manufactures artificial grass sports surfaces and carpet backings from Caldrum Works in Dundee and a second site in Abu Dhabi, also made it back into the black, turning around a £400,000 loss in 2012 to book a £200,000 operating profit for the period.
The uplift was obtained through a range of “operational efficiencies” which has seen the company continue to focus on costs and update practices. The size of the workforce has not changed significantly.
Group chief executive Steve Good, who will visit the Dundee facility next month, said the adverse effect of the weather meant it had been a challenging period, but things had begun to pick up in recent months.
“We have had a pause in our growth in the first half of the year. It is a temporary pause but we know the reason for it,” said Mr Good.
“Since mid-April momentum has resumed across the whole group not just in the four operations that did well but within the other two.
“We are now running at 7%/8% (ahead) on sales per week, and that has continued into the second half.”
L&B’s profits are traditionally skewed towards the second half of the year, and the company said it remained confident of meeting full-year financial expectations despite the weaker first six months.
The market forecast is for full-year revenues to climb by around £20m to £400m, with pre-tax profits increasing from £24.5m in 2012 to circa £26m this year.
“The strategy and strong fundamentals of the group remain unchanged and we have continued to invest and build organisational capability to support future growth,” chairman Martin Flower said.
“Outside of Europe and in sectors largely unaffected by the weather the business has continued to show good growth.
“With sales momentum renewed as the group enters the traditionally stronger second half we remain confident of meeting expectations for the full year.”
Shares in L&B closed up 1p at 65.75p.