Avon Rubber (AVON) was flat out during the first half making gas masks and filters for the US defence department, and enough are on order to keep it working deep into the new financial year. Sales leapt by a fifth, operating profit jumped 17 per cent to £5.8m and the dividend is up 20 per cent. Only a weak half for the dairy division blotted the copy book, but there are high hopes of a pick up there soon.
Admittedly, comparisons were easier for Avon given last year's poor first half, but 45 per cent growth in profit at the core protection and defence division to £4.3m was still impressive. Significantly, exports and non-military orders rose almost two-thirds and Avon made big sales to Oman, New Zealand and the Chicago Police Department. The unit's order book actually grew a tenth to £40m, with £34m of that to fill by the year-end, and the US Army is desperate for its kit given the situation in Syria.
Avon's dairy business struggled, however, as high feed costs and low milk prices dampened demand among North America farmers. Its Chinese operation won't breakeven for months, either, so profits fell 12 per cent to £2.6m. That said, the US slowdown should only be temporary and new products promise a better second half.
Broker Investec Securities expects adjusted pre-tax profit of £12.6m for the full year, giving adjusted EPS of 29.7p, up from £11m and 25.4p, respectively, last year.
AVON RUBBER (AVON) | ||||
|---|---|---|---|---|
| ORD PRICE: | 432p | MARKET VALUE: | £133m | |
| TOUCH: | 426-433p | 12-MONTH HIGH: | 450p | Low: 280p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 101p* | NET DEBT: | 32% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 49.6 | 4.61 | 11.3 | 1.20 |
| 2013 | 59.6 | 5.73 | 14.0 | 1.44 |
| % change | +20 | +24 | +24 | +20 |
Ex-div: 7 Aug Payment: 6 Sep *Includes intangible assets of £15.6m, or 51p a share | ||||
