15th Dec 2021 12:55
(Alliance News) - Shares in Avon Protection PLC on Wednesday dived 14% after the company unveiled plans to wind down its body and flat armour business and posted a disappointing bottom-line annual performance.
The Wiltshire, England-based company - formerly known as Avon Rubber - makes respiratory protection equipment for use by military, police, industrial and fire service personnel.
Avon posted revenue in the financial year that ended September 30 USD248.3 million, up 16% from USD213.6 million.
However the company swung to a pretax loss of USD35.6 million from a USD2.2 million profit. It reported an asset impairment of USD46.8 million related to its armour business. Avon said the results for the year had been hurt by delays to product approvals for the US Department of Defence body armour contracts, which triggered impairment charges, resulting in a loss and a subsequent review of the armour business.
In November, Avon had said its Vital Torso Protection Enhanced Small Arms Protective Inserts plates encountered a failure in first article testing, which will significantly delay the likely approval timetable for the product.
"Having conducted an in-depth strategic review of our armor business, we have concluded that an orderly wind-down of the body and flat armor business over the next two years to fulfil our existing body and flat armor customer commitments is in the best interest of our stakeholders as a whole," Avon said on Wednesday.
Shares plummeted 15% to 920.00 pence on Wednesday afternoon in London as the setbacks in its body armour unit continue to overshadow the rest of the protection equipment company.
Despite mixed financial results for the year, the company lifted its payout by 30% to 44.9 cents, from 34.5 cents.
Looking ahead, Avon was upbeat on future trading, with growth expectations underpinned by "long-term contracts in respiratory and head protection" and a strong opening order book excluding armour of USD116.5 million.
However the group noted the impact of disruption in supply chains and customer order pattern volatility, which was likely to affect financial results.
For financial year 2022, Avon is forecasting revenue, excluding its armour division, of between USD260 and USD290 million, representing growth of between 8% and 20%. Further revenue of up to USD25 million from the armour business could also be generated, depending on the timing of product approvals.
By Will Paige; [email protected]
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