UPDATE:Low & Bonar:1H Profit Due To Transport,Leisure Revival

13th Jul 2010 14:43

(Adds detail, CEO comment, share price.) By Hannah Benjamin Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Yarns, fabrics and flooring products supplier Low & Bonar PLC (LWB.LN) Tuesday swung to a first-half pretax profit on the back a resurgence in demand for its products from transport, leisure, and carpet manufacturing clients. "In about 40% of our portfolio we've seen a particularly good recovery, although it's certainly not back to pre-recession levels," Chief Executive Steve Good told Dow Jones Newswires. Demand has returned for Low & Bonar's products used in expensive cars, which indicates that consumers are once again buying luxury goods. "We supply products in to the premium automotive sector to be used in cars like Audis, BMWs and Mercedes' and that's recovered very well with a number of new product launches," Good said. Low & Bonar swung to a GBP7.9 million pretax profit in the six months to May 31, from a GBP5.8 million loss a year earlier. The result was flattered by GBP10.9 million of costs it booked during the first half last year, following a restructuring of its business and the termination of some bank facilities. But sales have continued to improve this year, with half-year sales rising to GBP155.8 million from GBP139.5 million a year earlier, with demand for its carpet tiles, which are used in retail properties and offices, showing particularly good growth. Low & Bonar now has its sights set on developing its presence in places like Asia, the Middle East and Central and Eastern Europe, regions where there is strong infrastructure growth. It already has two manufacturing facilities in Europe, has begun commercial production of grass yarn at its joint venture production facility in Abu Dhabi and also has a joint venture in China. "We have significant aspirations to grow in these regions in the product areas that will have significantly high growth rates, for example civil engineering products, as the amount of investment into China and the Middle East in these areas is considerable," Good said. The move is part of a strategy to get 25% of sales from outside its core markets of North America, Germany and other parts of Western Europe. But the company is still looking at opportunities domestically, and will this year find out if it has won bids to work on a number of London 2012 Olympic projects. It is paying an interim dividend of 0.5 pence a share, having scrapped an interim dividend at the same point last fiscal. It said this reflects an improved financial position and trading performance as well as confidence in its outlook, as the much-improved sales pattern in its second quarter has continued so far in the second half. At 1330 GMT, Low & Bonar shares were trading 4 pence, or 10.5%, lower at 39 pence, outperforming a 0.4% rise in the Dow Jones U.K. Smaller Companies index. -By Hannah Benjamin, Dow Jones Newswires; 44-20-7842-9298; [email protected] (END) Dow Jones Newswires July 13, 2010 09:43 ET (13:43 GMT)