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Low & Bonar Sees Lower H1 Results, Cuts FY View, CEO To Resign; Stock Dips

Shares of Low & Bonar Plc (LWB.L) were trading around 24 percent lower in London after the performance materials group warned on its first-half results to be materially behind that of the prior year. Based on the current trading and ongoing weakness in certain markets, the Board has lowered its expectations of full year performance.

The company also announced that Philip de Klerk will step down as CEO and leave the Board on July 1. The current non-executive Chairman of the Board, Daniel Dayan, will become executive Chairman on July 2. The company further said a search for a new chief executive will not be initiated immediately.

In its trading update, the company said that trading performance to date in the second quarter is stronger than the first quarter, as expected earlier. However, the rate of improvement is lower than expected. This was due to continued weakness in some of the end markets and the slow recovery of customer confidence in the Coated Technical Textiles division.

In the Chinese market, the ongoing Chinese/US trade dispute has created significant uncertainty, which hurt the sales trajectory in APAC in the second quarter. APAC sales are currently behind prior year. Also, Colbond sales in Europe are slightly lower than the prior year, with ongoing softness in the automotive market.

In the US, order books are increasing as new business continues to be won, offsetting in part lower volumes from a large Enka customer.

The Board continues to expect a stronger second half, helped by improving sales trend.

Regarding the resignation of CEO, the company said its Board has decided that a change of leadership is required to accelerate delivery of the transformation programme initiated in late 2018.

In addition to implementing performance improvement and cost reduction initiatives, the Board will focus on completing the disposal of the Civil Engineering division and on exploring other opportunities to maximise shareholder value in the short-term.

In London, Low & Bonar shares were trading at 11 pence, down 24.14 percent.

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