5th Sep 2014 06:40
LONDON (Alliance News) - Low & Bonar PLC Friday warned that it now expects its profit to be flat or rise only marginally in the current financial year, after experiencing a drop in demand across its European civil engineering markets and slower-than-expected order intake in its Saudi Arabian joint venture.
In a trading update, the performance materials engineer said it now expects that profit before tax, amortisation and non-recurring items for the year to end-November will be between GBP25.3 million and GBP26.5 million, compared with the GBP25.3 million it reported in its last financial year.
The company had reported profit before tax, amortisation and non-recurring items of GBP26.1 million for its last financial year, but the new comparative takes account of new accounting rules that change the way pensions are accounted for.
When the company reported its interim results on July 10, it had said it remained confident that full year profits would show "significant" growth over last year.
"Since reporting (the interim results), the group has experienced a drop in demand across its European civil engineering markets reflecting a slowdown in construction activity and the continuing difficult economic and geopolitical climate in Europe," it said in a statement. This sector accounts for about a quarter of its sales.
Low & Bonar's civil engineering sales grew by 4% in the first half of the financial year on a like for like basis, but the company now expects revenue in this sector to be flat in the full year due to the third-quarter downturn.
"Whilst a material improvement is not expected for the remainder of the year, the group believes that the strong fundamentals of this sector remain in place," it said.
The engineer had already warned in July that its civil engineering joint venture in Saudi Arabia has continued to suffer slower-than-expected order intake due to a delay in obtaining a key product certification. On Friday it said it now expects a loss of at least GBP1 million in the current financial year.
It said all its other business are continuing to perform well and in line with its own expectations.
By Steve McGrath; [email protected]; @stevemcgrath1
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