Low & Bonar shares plummet as it fires chief executive and warns on results
Textiles firm Low & Bonar's shares dropped around 25 per cent today as it fired its chief executive and warned full-year results would fall short of expectations.
Philip de Klerk, who took up the role just over a year ago, will leave on 1 July, the firm said.
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It is not starting the hunt for a replacement just yet, and chairman Daniel Dayan will become executive chairman after de Klerk leaves.
In an announcement to investors today, the company said trade war tensions hit its Chinese sales.
Meanwhile, a turnaround plan for the business is not going as quickly as first hoped.
It said that the second quarter of the financial year has to date been stronger than the first, but has still fallen below expectations due to “continued weakness” in some markets.
It also said that customer confidence had been slow to recover in its coated technical textiles division.
“Asia-Pacific sales are currently behind prior year for the year to date. Colbond sales in Europe are slightly lower than the prior year to date, with ongoing softness in the automotive market, but the second quarter is showing an improved trajectory,” the company said in a statement.
Low & Bonar's share price plunged 23 per cent to 11.2p in early trading.
The business embarked on a turnaround plan late last year after profits fell from £25m to under £10m over just a few years.
The plan aims to sell off non-performing parts of the business, while bringing down debt and improving performance.
Its planned sale of the civil engineering division “continues to proceed well”, the board said today with a deal expected to conclude before December.
Net debt is expected to fall below £110m in the middle of the year, from £128.5m at the beginning.
"Despite the warning, Q2 has been distinctly better than Q1 and the trajectory for the second half is expected to be much better, with many of the factors that have affected Q1 being absent," said Canaccord Genuity analyst Alex Brooks.
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Philip de Klerk was paid £458,000 last year. He came to the company as chief financial officer in October 2017, and was promoted to chief executive on 1 March the following year.
Chairman Daniel Dayan will step up to fill most of the chief executive’s role and the board said it is not immediately starting the hunt for a replacement.