Low & Bonar sinks after reporting trouble in civil engineering sector

5th Sep 2014 13:00

Shares in Low & Bonar were hit on Friday when the group revealed it had experienced a decline in demand across its European civil engineering markets, which it said reflected a slowdown in construction activity and the continuing difficult economic and geopolitical climate in Europe.The sector represents around a quarter of the group's sales.Although like-for-like civil engineering sales grew by 4% in the first half, the reduction seen in the third quarter means that sales for the sector will be flat for the year as a whole.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. Adding to the company's woes, its civil engineering joint venture in Saudi Arabia has continued to suffer a slower-than-expected order intake as a result of a delay in obtaining a key product certification. A loss of at least £1m is now expected for 2014. The group's other businesses continue to perform well and are in line with the board's expectations. However, recognising the lower demand in the civil engineering sector, the board anticipates that profit before tax, amortisation and non-recurring items for this year will be in a range of £25.3m, compared to £26.5m a year earlier.The stock was down 16.9% at 67.5p by 14:23.