Significant investment activity, business portfolio management and more favourable financing have all been prominent features in the year to date, with group EBIT progress also delivered in H116. We expect Low & Bonar Plc (LON:LWB) to deliver solid H2 performance and to continue its strategy of business improvement. Our estimates are modestly higher in the current year, more so in the following two and the FY17e P/E is now below 10x with a dividend yield of c 5%.
H116 results demonstrate strategic progress
In the first six months of FY16, three of Low & Bonar’s four ongoing business units demonstrated good revenue and margin progression, while the fourth was held back by internal production issues. Investment in these operations is starting to bear fruit and the intended exit from two Middle East-based businesses is a further affirmation of strategic execution under the new five-year plan. Net debt rose to £139.5m at the interim stage due to seasonal and timing effects. Cash flow back from these items, coupled with anticipated disposal proceeds of c £22m in H2, leads to our expected c £96m net debt at the year end.
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