LONDON (Alliance News) - Low & Bonar PLC Thursday said it is targeting acquisitions in North America and Latin America, following a strong half-year underpinned by growth across all its business segments.
The company, which supplies yarns, fabrics and fibres to the materials industry, said it is in talks to add to the business and will look across the pond to do so. A deal would follow last year's GBP16 million acquisition of Slovakian engineering products producer Texiplast.
?We are always looking to add through acquisitions,? Chief Executive Steve Good said in a telephone interview. ?We want entry into North America and Latin America where we see a lot of growth. We are always talking [to companies about acquisitions]. However, we haven't got any deals to announce tomorrow but hopefully in the next six to twelve months.?
Low & Bonar posted pretax profit of GBP3.6 million for the half year ended May 31, up from GBP2.4 million a year earlier, with Texiplast adding around GBP300,000 in profit.
Good, who will step down in September, said Texiplast's contribution will be more second half weighted and the company expects it to add around GBP2.5 million in profit for the full-year.
Good will be replaced by Brett Simpson, the former CEO of Belgium-based LBC Tank Terminals Group.
Overall, group revenue rose to GBP196.3 million from GBP184.1 million. Group operating margin rose 40 basis points to 5.9% from 5.5% a year earlier.
Low & Bonar said sales within Europe grew strongly, benefiting from a weak prior year comparative and a contribution from Texiplast, which is now been fully integrated and renamed Bonar Geosynthetics.
It said Asia Pacific sales were 27% higher, with good progress in China and the Middle East. However after a period of strength, North American sales growth slowed as demand for its flooring sector products became "a little softer."
?The US has been weaker and we've suffered and so have our customers.? Good said. ?Also, we have been affected by a US customer which decided to switch from a single sourcing to a dual sourcing procurement strategy. So we lost some business from that.?
Good said the company is not sitting back and will look to ?take our share elsewhere?.
?That's why we are investing GB26 million in a new manufacturing facility in China. We plan to take what we have in Europe and take it to a new direction and increase sales,? he said,
The new factory, which will be build on an industrial park in Changzhou near Shanghai, will use Low & Bonar's Colback technology to supply the fast growing and important carpet-tile backing and automotive markets in Asia. Colback is widely used as a primary backing in carpet tiles, high-grade patterned wall-to-wall carpeting, and walk-off mats. Production is expected to commence in 2016.
Low & Bonar said Civil Engineering and Building Product sector sales, which were hurt by a long winter in the previous year, rebounded and grew strongly in the recent half by 14% and 18%, respectively. Civil Engineering and Building Products sales, which fall into the Bonar division, helped the division's revenue grow to GBP115.1 million from GBP111.3 million a year earlier.
Additionally, in the leisure sector, higher volumes of artificial grass yarns also led to a significant increase in sales and good progress in targeted niches within the Industrial sector contributed to an 8% improvement. Yarns revenue grew to GBP17.9 million from GBP14.0 million a year earlier.
Looking ahead, the company said it remains confident of meeting internal expectations for the full year.
On the back of its performance, the company increased its interim dividend to 0.95 pence per share from 0.85p.
Low & Bonar shares were quoted up 3.5% at 81.00 pence Thursday morning.
By Anthony Tshibangu; anthonytshibangu@alliancenews.com; @AnthonyAllNews
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