- DLA contract delays to materially impact full-year results
- A separate $33m order from NATO’s support & procurement agency
Shares in Avon Rubber (AVON) slumped in the run-up to Christmas after the Wiltshire-based group announced a delay to a contract to make body armour plates for the US Army and the Defense Logistics Agency (DLA). The group has been engaged in a product approval process for small arms protective inserts and body-armour plates, but these have dragged on longer than anticipated, with the result that first deliveries under the contracts are now expected to commence in the first half of the group’s 2022 financial year, which will have a material impact on results for its September year-end.
Avon also revealed that a protest has been lodged against the US Army Next Generation Integrated Head Protection System contract announced on 24 September 2020. It does not currently foresee any material impact on expectations for FY2021, but the contract updates represent a negative beat on near- to medium-term prospects, something of a rarity where Avon is concerned.
Group chairman Bruce Thompson and non-executive board member Victor Chavez clearly viewed the consequent double-digit markdown in the share price as an open goal and promptly snapped up around £123,000 of stock between them, garnering a paper profit of £7,000 in the intervening period.
Avon has continued to derive some benefit from the pandemic, specifically increased demand for its respiratory protection range for use by first responders, while order intake for its Ceradyne ballistic helmet range provides encouragement following its launch in North America in July 2020.
But given the highly competitive nature of its end markets, the group will be desperate to avoid a repeat of the contract delays and risk imperilling its reputation for reliability in terms of delivery. Still, a separate announcement detailing a $33m (£24.2m) order for respiratory equipment from NATO’s support & procurement agency suggests that industry take-up of the group’s protection technologies is not slowing down. Buy at 3,250p.
Last IC view: Buy, 4,285p, 2 Dec 2020
| Buys | ||||
| Company | Director/PDMR | Date | Price (p) | Aggregate value (£) |
| Anglo American | Jim Rutherford | 23 Dec 20 | 2,430 | 143,844 |
| Audioboom | Michael Tobin (ch) | 21 Dec 20 | 176 | 20,000 |
| Avon Rubber | Victor Chavez | 21 Dec 20 | 3,055 | 30,825 |
| Avon Rubber | Bruce Thompson (ch) | 21 Dec 20 | 3,060 | 91,800 |
| BAE Systems | Stephen Pearce | 21 Dec 20 | 4,480 | 48,040 |
| British American Tobacco * | Marina Bellini | 23 Dec 20 | 2,699 | 53,980 |
| City of London | Jason Oakley | 22 Dec 20 | 85 | 42,500 |
| Driver Group | Steven Norris (ch) | 23 Dec 20 | 54 | 24,610 |
| GlaxoSmithKline * | Dr H Barron | 21 Dec 20 | 1,331 | 30,629 |
| Morses Club | Gary Marshall | 21 Dec 20 | 44 | 44,000 |
| Morses Club | Dave Belmont (cs) | 24 Dec 20 | 50 | 25,000 |
| Network International Holdings | Ali Mazanderani | 27 Dec 20 | 294 | 129,998 |
| NWF | David Downie | 30 Dec 20 | 198 | 19,800 |
| Rio Tinto * | Hinda Gharbi | 29 Dec 20 | 5,620 | 78,683 |
| SSP | Mike Clasper (ch) | 23 Dec 20 | 323 | 100,003 |
| Synthomer | Caroline Johnstone | 23 Dec 20 | 440 | 49,003 |
| Touchstone Exploration Inc | Stanley Smith | 22 Dec 20 | 116 | 34,800 |
| Tyman | Nicky Hartery | 23 Dec 20 | 357 | 356,500 |
| * Purchased via American Depositary Shares | ||||
| Sells | ||||
| Company | Director/PDMR | Date | Price (p) | Aggregate value (£) |
| AJ Bell | Andy Bell (ce) | 30 Dec 20 | 460 | 16,674,972 |
| AJ Bell | Fergus Lyons (PDMR) | 30 Dec 20 | 460 | 8,075,889 |
| Associated British Foods | George Weston (ce) | 23 Dec 20 | 2,253 | 1,463,407 |
| essensys | Ian Bryn Sadler | 22 Dec 20 | 148 | 207,200 |
| Gamma Communications | Andrew Stone | 18 Dec 20 | 1,614 | 286,541 |
| Impax Asset Management | Ian Simm (ce) | 29 Dec 20 | 700 | 140,099 |
| OSB Group | Peter Elcock | 24 Dec 20 | 443 | 106,816 |
| Strategic Minerals | Peter Wale | 23 Dec 20 | 0.4 | 15,500 |
| TMT Investments | Alexander Selegenev | 23 Dec 20 | 594 | 38,610 |
