Improvement in Performance Technical Textiles sales at Low & Bonar

13 Jul '10

5 min read

I am pleased to report that good progress has been made in the first half of the year. In comparison to the same period last year, sales have grown by 11.7% (14.1% on a constant currency basis), profit before tax, amortisation and non-recurring items has improved by 31.4 %, or 33.9% on a constant currency basis, to £6.7m (2009: £5.1m), and net debt is £67.4m, some £31.3m lower than in May 2009.

There have been three noteworthy features during the first half of the financial year: strong and broadly based sales growth; improved asset efficiency and net debt management; and the start up of our new manufacturing facility in Abu Dhabi.

Start up of Abu Dhabi production facility

The Abu Dhabi joint venture investment to produce artificial grass yarns for the European and North American markets has completed pre production trials and is now in commercial production. Nonrecurring costs of £0.7m were incurred in starting up the facility.

This is an important milestone in the transformation of our loss making Technical Yarns business.

Operational performance

Performance Technical Textiles
(Woven and non-woven fabrics and yarns for use in the civil engineering, carpet tile manufacturing, leisure, construction and industrial sectors).

Sales in the division improved by 13.6% on a constant currency basis. However margins declined to 6.6% (2009: 8.1%) and the results of the businesses within the division were mixed.

Colbond performed impressively with a strong performance in both sales and margin terms. As anticipated, the Technical Yarns business remained loss making in its transition year.

The Fabrics business has suffered from temporarily lower margins as a consequence of the significant increases in the cost of polypropylene over the first half of the year and the timing lag in adjusting selling prices to restore margins. With selling prices now adjusted, margins are expected to improve in second half of the year.

Divisional sales grew sharply in the transport and carpet manufacturing sectors, with new industrial applications in composites and filtration also contributing. These sectors have benefitted from new product launches which have grown market share, delivered strong growth in Asia, and shown a modest recovery in European and North American markets from the lows of the first half of last year.

Civil engineering sales, after a slow start to the year, have picked up strongly to be ahead of last year. Building product sales into commercial and residential applications have yet to show any meaningful recovery.

Technical Coated Fabrics
(Technical coated fabrics for use in the print, architecture, transport, leisure and industrial sectors).

Our Technical Coated Fabrics Division performed well in the first half of the year. Sales grew by 15.2% on a constant currency basis, with operating margins improving to 8.9% (2009: 6.4%).

Sales developed well in building products, on the back of new projects for architectural membranes and sunshading fabrics which, together with a modest recovery in early cycle leisure and trailer side curtain markets, delivered good year on year growth. Operating margins benefited both from improving manufacturing efficiencies and increased volumes through a tightly controlled cost base.

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