Interim Management Statement & Yarns Restructuring

12 October 2010

Low & Bonar PLC

Interim Management Statement and Restructuring of Technical Yarns Business

Low & Bonar PLC ("the Group"), the international performance materials group, today publishes its Interim Management Statement covering the period from 1 June to 12 October 2010 and also announces its intention to carry out a strategic restructuring of its Technical Yarns business to restore profitability. 

The improvement in sales referred to in the trading update on 4 June 2010 and half year results announcement on 13 July 2010 has been sustained throughout the second half of the year to date. The Group continues to benefit from its international reach and increasing exposure to high growth geographies. Sales into the civil engineering and carpet manufacturing segments have been particularly strong, with good progress also evident in the transport and leisure segments and, more recently, in the industrial segment. As expected, building product activities remain subdued. 

As a result of this progress, the Group is confident that full year trading performance will be in line with market expectations.

The proposed restructuring of the loss making Technical Yarns business follows challenging market conditions during 2009 and 2010 and the successful establishment of the Group's new yarn production facility in Abu Dhabi. In the year ended 30 November 2009, the Technical Yarns business made an operating loss of £1.8m.

A consultation exercise has begun today with employee representatives in Belgium about the intended closure of the Group's factory in Ostend. The Ostend factory produces artificial grass yarn and has approximately 30% of the installed production capacity of the business. If the plant in Ostend closes, its manufacturing output would be transferred to the Group's recently commissioned factory in Abu Dhabi. The Group currently estimates total non-recurring restructuring costs in the year to 30 November 2010 of £6.0m, of which net cash costs are estimated to be £3.0m, the majority of which will be incurred in the year to 30 November 2011.

If the intended changes are implemented, this will leave the Technical Yarns business with two focused production sites in Scotland and Abu Dhabi.

Steve Good, Group Chief Executive, said:

"I am pleased with the trading momentum that the Group continues to generate across all segments. The restructuring of the Technical Yarns business, following the consultation in Belgium, will restore to profitability the one underperforming business in the Group."

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Forward looking statements

This announcement includes statements that are, or may be deemed to be, "forward looking statements". These forward looking statements can be identified by the use of forward looking terminology, including, but not limited to, the terms "believes", "estimates", "anticipates", "expects", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include matters that are not historical facts.

By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward looking statements are not guarantees of future performance. The Group's actual results of operations, financial condition and liquidity may differ materially from the impression created by the forward looking statements contained in this announcement. In addition, even if the results of operations, financial condition, and liquidity are consistent with the forward looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause these differences include, but are not limited to: changes in the competitive framework in which the Group operates and its ability to retain market share; the Group's ability to generate growth or profitable growth; the Group's ability to generate sufficient cash to service its debt; the Group's ability to control its capital expenditure and other costs; significant changes in exchange rates, interest rates and tax rates; significant technological and market changes; future business combinations or dispositions; and general local and global economic, political, business and market conditions. In light of these risks, uncertainties and assumptions, the events described in the forward looking statements in this announcement may not occur.

Other than in accordance with its legal or regulatory obligations, the Group does not undertake any obligation to update or revise publicly any forward looking statement, whether as a result of new information, future events or otherwise.