LOW & Bonar, the plastic and textiles group founded in Scotland, has seen first half profits plunge around 40 per cent after cost increases and operational issues weighed on performance.

The London-based company made £9 million underlying operating profit in the six months to 31 May compared with £15.5m in the same period last year.

Revenues fell 2% annually, to £206.2m amid what the group described as challenging trading conditions.

The company said: “It has been a difficult first half, and the weaker performance can be attributed to both external and internal factors.”

External factors included input cost volatility, increased capacity and aggressive competition in some key markets. The company aims to better anticipate the impact of these factors in the future. It added: “We are taking action to address our own internal shortcomings, such as production consistency and customer service levels.”

Philip de Klerk, who became chief executive in March, said: “The first half has been challenging. Raw material prices have increased more than we anticipated and we have not been able to pass these on in full. Our operational performance is not yet at the level I expect, although we are confident that the organisational changes which we are implementing will improve this.”

The group plans to sell the division serving civil engineering markets to focus on growth opportunities in other markets. These include coated technical textiles.

Low & Bonar makes carpet backing at a plant in Dundee, which is its only UK manufacturing facility.

Its registered office remains in Dundee where the company was founded in 1903.

Shares in London-listed Low & Bonar closed down 4.9p at 43p.