Low & Bonar: AGM Flags Significant FY17 Progress Expected
Edison | Apr 13, 2017 07:11AM ET
In a brief AGM statement, management stated that FY17 was off to a good start with unchanged guidance for the year. There is tangible evidence of strategic actions and their benefits extend beyond the current financial year. Low & Bonar’s (LON:LWB) share price has picked up recently and is beginning to acknowledge the company’s growth prospects.
Confidence in expected FY17 progress
Four months into the financial year, management sounds confident that FY17 will be a year of significant progress. No further detail on individual business unit progress was included in the update. We see the full benefit from the new China Colback plant (phase one), restored operational performance at Coated Technical Textiles and margin mix development in Civil Engineering as the most notable, high level growth drivers this year. At current levels, there will also be some favourable year-on-year FX translation benefit though below prior year levels (ie c £2.5m vs £3.4m reported for FY16). Low & Bonar has invested well above depreciation in the last three years. The company is committed to do so again in FY17, including a phase two expansion in China underscoring the success and local acceptance of the initial greenfield set-up. Consequently, we expect to see net debt increase over the course of the year.
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