Dundee-founded textile manufacturer Low & Bonar (L&B) reported an improving financial performance with rising half year profits in line with expectations.
The group said the €27 million (£22.8m) sale of its artificial grass yarns business, which is set to cost jobs in Dundee, will allow it to invest in higher margin businesses achieving better returns.
The sale of grass yarns to Dubai-based Mattex will reduce group borrowings by around €29m (£24.5m) after costs of €1m (£845,350), and will provide flexibility for expansion.
Low & Bonar was founded in Dundee in 1903 and employed thousands of people in the city at the height of the jute trade.
It presently employs about 80 at the Caldrum Works in artificial grass and carpet backing production.
The latter will remain in Dundee after the grass yarns sale which involves the group’s Abu-Dhabi production facility along with interests in Europe and the United States.
Some assets from other subsidiaries in L&B’s sports & leisure business unit are also part of the package.
On a constant currency basis profit before tax, amortisation and non-recurring items from continuing operations rose by 1% to £10.6m for the six months to May 31.
Revenues from continuing operations increased by 2.4% to £180.6m while operating profits increased by 2.3% to £13.3m.
The growth was attributed to robust profits and margin progression in Building & Industrial, Civil Engineering and Interior & Transportation businesses.
Non-recurring costs of £200,000 were incurred for the construction of the new Colback manufacturing factory in China.
Sales of Colback carpet backing produced in Changzhou were ahead of plan at £4m in the first four months of production.
The joint Bonar Natpet venture with Saudi Arabia’s National Petrochemical Industry made a loss of £1.2m and a loss of £600,000 for the first half.
Market conditions in the Middle East are difficult, and L&B is negotiating the sale of Bonar Natpet.
Martin Flower, L&B’s chairman, said: “The Group has continued to execute its strategy, with the start of production in China, the exit from grass yarns and the work to find a solution for Bonar Natpet.
“We are starting to realise the benefits of the reorganised business structure and leadership.
“We remain confident of meeting the board’s expectations for the full year.”
