23rd May 2023 11:04
(Alliance News) - Avon Protection PLC shares tumbled on Tuesday after the personal protection equipment warned of "softer demand" for respiratory mask systems and reported weaker-than-expected first-half revenue.
The firm now expects a weaker second-half outturn in its Respiratory division, which serves military and law enforcement customers.
Shares in the company traded 10% lower at 871.40 pence each in London on Tuesday morning.
In the half-year ended April 1, revenue fell 4.7% to USD116.2 million from USD121.9 million a year prior. Its pretax loss narrowed year-on-year to USD5.3 million, however, from USD13.6 million.
The company booked no costs related to the impairment of non-current assets, compared to USD3.8 million a year earlier. Back in December 2021, it decided to wind down is armour business, roughly a month after it launched a review of it.
In addition, selling and distribution costs were 15% lower at USD10.9 million, research and development costs fell 14% to USD4.8 million and general and administrative expenses were trimmed by 21% to USD24.3 million.
Chief Executive Officer Jos Sclater said Avon Protection has "already taken meaningful steps forward" after pursuing a turnaround plan aimed at improving efficiency and organic growth.
"In addition, we have developed strategic initiatives to further improve the business over the medium term to accelerate growth, improve margins and returns on capital, and protect more lives through the sale of our innovative products," Sclater said.
"Revenue during the first half was below our expectations, but a better second half is supported by the strong order book."
The order book was worth USD160.7 million at the end of the first-half, up 20% year-on-year at constant currency.
Looking to the second half, Avon Protection said it has a "more cautious view" for its Respiratory division. This is due to "softer demand for mask systems" in the first-half. Respiratory revenue for the full-year is now expected to be lower than previously thought.
Avon Protection added: "Full year group revenue excluding armour now expected to be 9% lower than the prior year, reflecting the Respiratory demand backdrop and some ongoing risk to shipment timings in H2. Notwithstanding the lower revenue, following decisive action to right size Respiratory, full year group [earnings before interest, tax, depreciation, and amortisation] margins excluding armour expected to be broadly consistent with the 14.7% reported in the prior year."
Avon Protection maintained its interim dividend at 14.3 cents per share.
By Eric Cunha, Alliance News news editor
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