Avon Rubber (AVON) is ending its involvement in respiratory equipment for firefighting personnel, electing instead to prioritise the military and law enforcement markets, where the group is the leader in both.
Avon’s full-year results brought the news that the group registered $340m (£264m) in long-term contracts over its full year, while it expects to complete its $91m acquisition of ballistic protection specialist 3M in its 2020 first half. Its fire business, which Avon acquired in 2005, has largely been flat since and has come up against stiff competition, leaving Avon around fifth or sixth in the market according to chief executive Paul McDonald. “It takes quite a lot of our time and attention, and it’s giving us the lowest returns in the group,” he said.
But Avon has succeeded in bringing technology across into its military offering, which has thrived accordingly. Far from just producing respiratory masks for the face, Avon now offers equipment for personnel from the waist up, and the integration of 3M represents the latest step in this transition. “We’ll have also paid down the debt at the end of [2020], so we’ll have the firepower” for more deals, Mr McDonald added.
House broker Peel Hunt forecasts full-year 2020 pre-tax profits and earnings per share of £38.6m and 99.5p respectively, rising to £43.6m and 112.4p in 2021.
| AVON RUBBER (AVON) | ||||
| ORD PRICE: | 1,870p | MARKET VALUE: | £ 580m | |
| TOUCH: | 1,864-1,880p | 12-MONTH HIGH: | 1,948p | LOW: 1,075p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 40 | |
| NET ASSET VALUE: | 279p* | NET CASH | £48.3m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 134 | 17.8 | 50.4 | 7.30 |
| 2016 | 143 | 15.9 | 58.1 | 9.50 |
| 2017 | 159 | 18.9 | 70.6 | 12.30 |
| 2018 | 166 | 21.6 | 70.1 | 16.02 |
| 2019 | 179 | 13.7 | 46.9 | 20.83 |
| % change | +8 | -37 | -33 | +30 |
| Ex-div: | 13 Feb | |||
| Payment: | 13 Mar | |||
| *Includes intangible assets of £35.3m, or 114p a share | ||||
