LONDON (Alliance News) - Low & Bonar PLC on Monday announced the upcoming departure of its chief executive and said its performance in the first half of its financial year will be "materially behind" the year before.
Shares in Low & Bonar plummeted 27% to 10.52 pence in morning trade.
Philip de Klerk will step down as CEO on July 1 and the company will promote Non-Executive Chair Daniel Dayan to executive chair on July 2. The company does not plan to seek a new CEO straight away, but will review the situation "later in the year".
The company said its leadership change stemmed from a need to accelerate its transformation programme, which began in late 2018.
The performance materials firm also said it has made a slower recovery than expected in its second quarter, which ends May 31. This was attributed to continued market weakness and "the slow recovery of customer confidence" within its Coated Technical Textiles unit, which creates modified fabrics for outdoor use.
"In the CTT business, progress is being made, but it is now clear that, despite quality improvements in place, it will take longer than expected to regain customer loyalty and improve sales. Weak demand in transport markets, notably Germany and Eastern Europe, has also been a headwind," said Low & Bonar.
The company added it has been hurt by the ongoing trade dispute between China and the US. Nonetheless, order books in the US are increasing - partially offsetting weaker volumes from an undisclosed "large Enka customer". Enka Solutions is Low & Bonar's anti-erosion unit.
"First half performance will be materially behind that of the prior half year. The board continues to expect the improving sales trend to underpin a stronger second half, helped by the usual seasonality in the business, and also supported by further cost reductions already in process," said Low & Bonar.
"In light of current trading and ongoing weakness in certain markets, the board has lowered its expectations of full year performance," the company added.
Low & Bonar's planned divestment of its Civil Engineering division is continuing as planned, and the sale processes for two businesses within the division are likely to conclude in its current financial year, which ends November 30.
The company said its balance sheet is still a key focus, and its debt at mid-year is forecast at less than GBP110 million and it is on track to meet banking covenants.
Low & Bonar said: "2019 is a year of transition as the group simplifies its portfolio and structure while working to improve operational performance. Progress is being made, but it is taking longer than anticipated to resolve some of the legacy issues during a challenging period. The board will take the actions necessary to improve performance in the short and longer-term."