Shares in Avon Rubber (AVON) climbed 7 per cent after news that its full-year results will be "comfortably ahead" of market expectations. In a buoyant pre-close update, the group reported a positive outlook for all its divisions, including increased sales of its core protection products, stronger cash generation and easing currency fluctuations.
Its core protection and defence division, which makes respirators and masks, achieved better sales than previously expected in the second half of the financial year, due largely to an increase in orders from the Middle East. Cash generation, too, was stronger than forecast, with a net cash position of £2.9m boosted by a prompt large payment from the US Department of Defence. This transformation from last year's net debt position of £10.9m has fuelled speculation of potential M&A activity in the future.
Outside of defence, the outlook is also bright for its diary division, which makes rubber parts for milking machines. The success of its cluster exchange service was pinpointed by management as a key driver, as it continues to make "excellent progress" in the US and Europe.
Broker Investec upgraded its full-year 2014 and 2015 forecasts and now expects pre-tax profits of £16.3m for the current year, giving EPS of 40.2p.
