Low & Bonar

LN: LWB

£46.2m market cap

6.7p last close

Low & Bonar produces specialist performance materials for a variety of end markets by combining polymers with specialty additives and pigments. From FY19 Building & Industrial and Interiors & Transportation will be combined as the Colbond division.

Investment summary

H119 results included a small positive operating profit contribution, marginal loss at the PBT level and a passed interim dividend. Trading conditions were as previously flagged and both ongoing divisions experienced the effects of lower volumes and some manufacturing efficiencies. At the end of H119, net debt stood at £99m; the announced disposals of both Civil Engineering businesses for an aggregate consideration of €23.5m to be received during H2 is a significant step in reducing leverage. Management is focused on investment to improve operational performance and rebuild volumes and margins across the business. Our estimates are under review.

Y/E Nov
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2017A 446.5 55.8 30.7 5.4 1.2 0.7
2018A 431.9 39.2 16.7 3.0 2.2 0.5
2019E 402.9 32.6 8.3 0.9 7.4 3.9
2020E 412.4 39.0 15.7 1.6 4.2 1.3
Last updated on 16/09/2019
Industry outlook

Key strategic medium-term financial targets are revenue growth 1-2% above regional weighted GDP, 10% operating margins, a 12%+ return on capital employed. The intention is to reinstate dividends (at 40% of PAT) when net debt:EBITDA is below 2.5x – and remain so after any dividend payout – for two consecutive covenant testing periods.

Last updated on 16/09/2019
Sector
Industrials
Share price graph
Balance sheet
Forecast net debt (£m) 87.9
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (2.9) (16.0) (85.6)
Relative* (6.2) (16.4) (85.6)
52-week high/low 47.0p/6.0p
*% relative to local index
Key management
Philip de Klerk CEO
Ian Ashton CFO

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