Performance materials maker Low & Bonar PLC (LON:LOWB) has maintained its interim dividend despite half-year underlying profit before tax halving.
The interim divi has been held at 1.05p, reflecting the board’s confidence in the actions it has taken to revive the business.
The underlying profit before tax in the six months to the end of May plunged to £6.5mln from £13.1mln the year before; the figure excludes a non-cash write-down of £13.3mln in the value of the Coated Technical Textiles (CTT) business.
Net debt at the end of May 31 of £140.3mln was 5.8% lower than a year earlier and only slightly higher than the year-end position.
The company said ongoing cost-saving initiatives are now expected to deliver ahead of plan, with around £2.5mln of savings in the current financial year and thereafter £4mln on an annualised basis.
"The first half has been challenging. Raw material prices have increased more than we anticipated and we have not been able to pass these on in full. Our operational performance is not yet at the level I expect, although we are confident that the organisational changes which we are implementing will improve this,” said Philip de Klerk, who took over as the chief executive officer in January.
“There is a significant transformation programme underway at Low & Bonar, with a resolute focus on cash and business optimisation. The strategic actions underway will deliver against this objective and although it is early in the programme, good progress has been made. We have put the customer back at the centre of what we are doing and will drive further innovation and product development to meet market needs," he added.
One City broker reduced its full-year profit before tax forecast by 17% to £25mln, with a similar-sized cut to projected earnings per share.
Next year’s forecasts were also trimmed, with the profit before tax projection down 9% to £29mln and the earnings per share down 10% to 6.2p.
The broker said it was increasingly confident that the group would deliver its targeted £15mln reduction in net debt this year.
Shares in Low & Bonar tumbled 4.9p to 43p following the trading update and are at almost half the level they were a year ago.
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