Low and Bonar shares collapse as losses quadruple on-year

Low and Bonar shares collapse as losses quadruple on-year

Building materials company Low and Bonar plc (LON: LWB) have seen its share price dive after its losses widened drastically on a year-on-year basis.

One positive piece of news is that the Company’s net debt narrowed from £140.3 million to £99.0 million on-year for the first half. However, their revenues shrunk 9.3% to £157.9 million, underlying operating margin narrowed from 5.6% to 1.6% and operating profit dropped from £9.6 million to £2.7 million.

More worryingly though, is that statutory operating loss widened from £9.5 million to £38.9 million, stat loss before tax grew from £12.3 million to £41.7 million and the Company’s interim dividend fell from 1.05p per share to nothing during the period.

Low and Bonar comments

Daniel Dayan, Executive Chairman, said:

“The first half of 2019 has been another extremely challenging period for Low & Bonar.  As a result of the Group’s poor performance, I was appointed Executive Chairman at the beginning of July 2019, temporarily combining the roles of Chairman and Chief Executive.  Our priorities remain unchanged, which are to transform the Group’s operational performance and ensure a strong and sustainable financial position.  Progress has been made, notably through the equity raise, the development and implementation of projects to improve facilities at Asheville and at CTT, the resolution of CTT’s quality problems and the disposal of Civil Engineering.  Whilst this performance improvement plan is being implemented, the Board remains focused on maximising shareholder value and will consider all strategic options.”

Looking forwards, the Group’s statement read,

“2019 is a year of transition as the Group simplifies its portfolio and structure, while also working to resolve legacy issues and improve operational performance against a backdrop of market softness in several segments and geographies.  Following a very weak first quarter, performance improved in the second quarter of the year although still behind that of the prior year as a result of both challenging market conditions and manufacturing inefficiencies. It is evident that a number of the Group’s end markets remain difficult and it is likely that heightened levels of uncertainty will persist into the second half. Against this backdrop the Group is focused on delivering the benefits of the ongoing strategic initiatives and further cost saving actions in order to meet the Board’s expectations for the continuing business for the remainder of the year.”

Investor notes

Following the update, the Company’s shares dropped 17.33% or 1.68p to 8.04p a share 30/07/19 15:56 BST. The Group’s p/e ratio is currently -0.67 and their dividend yield (when paid out) is 14.95%.

Elsewhere in property development and estate agency news, there have been updates from; LSL Property Services plc (LON: LSL), Countryside Properties PLC (LON: CSP), Ashley House Plc (LON: ASH) and Persimmon plc (LON: PSN).