A static defence market explains gas mask and dairy tube specialist Avon Rubber's (AVON) largely flat full-year sales performance. But, looking forward, a move into China could give Avon access to Asia's fast-growth markets.
Despite tough defence conditions, Avon's new equipment orders from the US Department of Defense (DoD) held up with 193,000 gas masks delivered in the year, compared with 143,000 in 2011-12. However, the DoD ordered half the number of detachable filters this time, which explains why divisional sales were slightly lower at £74.6m - although efficiencies meant operating profit remained flat at £7.5m. Management said the US government was making slower procurement decisions, but that its 10-year supply contract had been largely unaffected by budget worries.
The dairy division, meanwhile, grew revenue by 6.3 per cent in the period to £32.1m, with profits there rising nearly 8.9 per cent to £6m. Not only did Avon gain market share in the US, but it has also entered the Chinese market for dairy products for the first time - a sales and distribution centre was opened there to tap into fast-growing Asian markets.
Broker Investec Securities expects adjusted pre-tax profit for 2013 of £12.3m, giving EPS of 28.3p (from £11m and 25.4p in 2012).
AVON RUBBER (AVON) | ||||
---|---|---|---|---|
ORD PRICE: | 333p | MARKET VALUE: | £102m | |
TOUCH: | 329-333p | 12-MONTH HIGH: | 333p | LOW: 257p |
DIVIDEND YIELD: | 1.1% | PE RATIO: | 12 | |
NET ASSET VALUE: | 78p* | NET DEBT: | 36% |
Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2008 | 54.6 | -12.4 | -39.1 | nil |
2009 | 101 | 1.86 | -0.60 | nil |
2010 | 118 | 7.13 | 15.2 | 1.50 |
2011 | 108 | 10.2 | 25.2 | 3.00 |
2012 | 107 | 11.0 | 26.9 | 3.60 |
% change | -1 | +8 | +7 | +20 |
Ex-div: 13 Feb Payment: 15 Mar *Includes intangible assets of £13.2m, or 43p a share |