Low & Bonar, the international performance materials group, has announced strong sales and profit growth for the six months ended 31 May 2014. Profit before tax, amortisation and non-recurring items on a constant currency basis increased by 34.9% comparing with the last year.

Martin Flower, Chairman, commented: “The Group has made a strong start to the year; constant currency sales and profits are significantly ahead of last year. Notwithstanding currency headwinds, with good sales momentum carried into the Group’s traditionally stronger second half, we remain confident that full year profits will show significant growth over last year.”

“During the last two years the Group has increased investment levels and built organisational capability to better position itself globally. We are now benefiting from these investments and expect to continue to grow and extend our geographic reach over the next two years.”

Strong sales growth

In the first half of the year, constant currency sales growth excluding acquisitions was 8%. Texiplast, which was acquired in September 2013, performed in line with expectations and contributed an additional 2% to constant currency sales growth.

As anticipated, sales within Europe grew strongly. Asia Pacific sales were 27% higher with good progress in China and the Middle East. After a period of strength, North American sales growth slowed as demand for the flooring sector products became a little softer. 

Civil engineering and building product sector sales, which had both been adversely affected by last year’s long winter in Europe, rebounded and grew strongly by 14% and 18% respectively. In the leisure sector higher volumes of artificial grass yarns also led to a significant increase in sales.

Well positioned

The Group has strong positions in attractive niche markets and remains committed to its medium-term target to grow sales at least 3% above Eurozone GDP growth, achieving operating margins of 10% and a return on capital of 17%, the company reports.

In the last two years the company has made significant investments and built organisational capability to accelerate growth and extend its geographic reach.

Accelerated growth

Last year’s decision to build a local sales and technical team and distribution capability in China has significantly accelerated Bonar’s growth in the APAC region and led the company to commit to a £26m manufacturing investment in China, which will produce products for the flooring, automotive and industrial markets by the end of 2016.

Performance improvement in the technical coated fabrics division is now gaining momentum, according to the manufacturer, benefiting from the recent investments made to improve operational efficiency and to augment growth through niche market focus and targeted geographic expansion.

Texiplast

Following the acquisition, Texiplast has performed well and in line with our expectations. The business has been fully integrated into the Bonar organisation and renamed Bonar Geosynthetics.

Commercial activities have been merged into Bonar’s well-invested regional sales organisation, product training has been completed, and the site has been re-organised and manufacturing capabilities improved.

www.lowandbonar.com