Favourable currency swings and strong performances from new acquisitions, as opposed to a surge in orders from its incongruous customer base of military chiefs and dairy farmers, were the primary drivers behind the 8 per cent rise in Avon Rubber 's (AVON) adjusted operating profit last year.
But while a stronger dollar's £9.4m contribution to the top line should not be ignored, Avon's businesses still look in good nick. In the protection and defence segment, a $9m (£7.2m) order for the recently approved CBRN escape hood bodes well for the order book, as does a contract to potentially supply the US Department of Defense with aircrew masks.
Weak milk prices again weighed on the dairy business, although this was offset by a full year of revenue from milking equipment group InterPuls. However, outgoing financial director Andrew Lewis believes that five consecutive months of better milk prices should mean increased sales of semi-consumable products in 2017, as was the case at similar points in the cycle in 2010 and 2014.
Analysts at Peel Hunt have increased their adjusted pre-tax profit and EPS expectations to £25.5m and 64p for the current financial year, against £21m and 67.5p for the 12 months to September 2016.
AVON RUBBER (AVON) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,025p | MARKET VALUE: | £318m | |
| TOUCH: | 1,025-1,035p | 12-MONTH HIGH: | 1,130p | LOW: 706p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 135p* | NET CASH: | £2m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 107 | 11.0 | 26.9 | 3.60 |
| 2013 | 125 | 12.4 | 30.0 | 4.32 |
| 2014 | 125 | 13.9 | 36.2 | 5.61 |
| 2015 | 134 | 17.8 | 50.4 | 7.29 |
| 2016 | 143 | 16.8 | 61.5 | 9.48 |
| % change | +6 | -6 | +22 | +30 |
Ex-div: 16 Feb Payment: 17 Mar *Includes intangible assets of £47.4m, or 153p a share | ||||
