Higher-margin export sales powered adjusted operating profit up by 41 per cent at Avon Rubber (AVON) during the first half to £8.2m. In fact, the underlying business did better than expected and only the strong pound prevented further earnings upgrades. Surprisingly strong cash flow halved net debt and financed a 30 per cent increase in the dividend, too.
Profit at the core protection and defence division leapt by 57 per cent and cash profit margin rose 500 basis points to 20 per cent. A second-half spent filling lower margin US defence orders will be less impressive, but social unrest in South America and conflicts elsewhere should keep the phone ringing. Margins at Avon’s dairy division also hit 20 per cent, as its own-brand Milkrite products sold well.
