Low & Bonar unveils £20m share placing

Picture: PA
Picture: PA
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SPECIALIST materials manufacturer Low & Bonar says it has returned to profitable growth with increasing momentum in its civil engineering and building product sectors.

The company, which has its roots in Dundee, revealed its improving fortunes as it announced a £20.4 million share placing for the acquisition of a Slovakian firm to further bolster its civil engineering business.

Steve Good, chief executive of Low & Bonar, described the sector as one of the group’s “key growth priorities”.

Low & Bonar has agreed to pay about €18.9m (£16m) cash for Texiplast, which makes products used for soil reinforcement, filtration and erosion control. Mainly serving markets in central and eastern Europe, Texiplast employs 80 people at its manufacturing plant near Bratislava. To fund the deal, Low & Bonar will place more than 29.6 million shares at 69p each, raising roughly £19.8m after expenses.

Last year, Texiplast generated an underlying pre-tax profit of €3.1m on sales of €12.7m.

Low & Bonar plans additional investment in both sales and technical capabilities at the plant, which has the spare capacity to absorb additional demand.

“Texiplast is an exciting bolt-on acquisition, which is aligned to our strategy and highly complementary to our activities in the civil engineering sector,” Good said. “The placing funds the acquisition and provides flexibility to support further growth.”

Low & Bonar started out a century ago as a jute merchant in Dundee, where it continues to employ about 120 people. However, most of its nearly 2,000 employees work abroad in China, Europe, the Middle East and North America.

In July, the group reported a 36.5 per cent drop in pre-tax profits for the six months to 31 May. Low & Bonar blamed the decline on Europe’s long winter and washout spring, which hampered sales of its specialist textiles to the civil engineering, building and agricultural sectors.

However, Good said yesterday that group sales had improved in the third quarter to stand 5 per cent ahead of the same period last year. Momentum in the civil engineering and building products sectors continued “for the majority of the third quarter”, while the flooring, industrial, transport and leisure sectors continued to perform well.

“With the improvement in sales and the benefit of more favourable exchange rates, the board remains confident second half profits will be well ahead of last year,” the company said.