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Avon Rubber upsets rival

Gas masks maker Avon Rubber snared a five-year contract with the US military in December worth $176m (£111m), and was to have delivered $2.5m of spare filters straight away. However, a losing bidder has raised a contractual protest with the US Department of Defense (DoD), which will likely shift those sales into the second half.

That’s unwelcome, and uncertainty as to when orders from non-DoD markets will come through doesn’t help the Protection & Defence (P&D) business either. Still, the smaller but faster growing dairy division had better news on first quarter trade. Its new milking device now has 10 per cent of the lucrative North American market and is expected to keep growing.

IC View:

Avon’s long-term prospects remain intact, but near-term uncertainty and a three-fold increase in the share price since our original buy tip (93p, 11 May 2010) persuades us it’s time to bank profits. Hold.

Last IC view: Buy, 310p, 23 November 2011

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By Lee Wild,
02 May 2012

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