Avon Rubber p.l.c. (LON:AVON) has today provided the following trading update for its current financial year ending 30 September 2021.
Summary
Further to the AGM update on 29 January 2021, trading in the second quarter continued to be strong with ongoing positive momentum and continued strong order intake across our portfolio of life critical personal protection systems for the world’s militaries and first responders. The Group expects to report revenue of $122 million for the first half (H1 2020: $87 million), including a first-time contribution from Team Wendy of $20m during the first five months of ownership.
As a result and taking into account the current order book of $155m and expected order intake in the second half, the Board remains confident of achieving its expectations for the current financial year.
Military
Within our Military business, revenues increased by 16% year-on-year driven by strong growth in respiratory protection. Orders received in the first half were up 30% , including $38 million of initial orders under the NATO Support & Procurement Agency contract, $17 million under the U.S. Department of Defense M69 aircrew mask system contract and the recently announced $19 million order under the existing U.S. Army Integrated Head Protection System (“IHPS”) contract.
We expect the U.S. Army to commence the tender process for a multi-year, multi-source full rate production contract for the next generation IHPS during the second half of our current financial year. We believe our product continues to represent the optimal solution for the customer and that the tender process will provide medium term visibility for the IHPS programme.
We are in the process of finalising revised designs for the U.S. Defense Logistics Agency Enhanced Small Arms Protective Inserts (“DLA ESAPI”) contract with the customer and remain on schedule to complete first article testing during the second half of the year with first deliveries expected to commence in the first half of our 2022 financial year.
First Responder
Within our First Responder business, we have continued to see strong demand across our entire respiratory and ballistic protection range with revenues increasing by 19% year-on-year in the first half and orders received up 29% . We have also continued to see a strong pipeline of opportunities to further broaden our customer base across both our respiratory and ballistic product portfolios.
Team Wendy
Team Wendy has continued to perform well and in line with expectations in the first five months of ownership with continuing strong order intake.
Financial Update
The Group’s financial position remains strong, with net debt before lease liabilities of $13 million at 31 March 2021, representing leverage of less than 0.2x consensus EBITDA for the current financial year.
The weighting of revenues to the second half of the year, together with increased inventory holdings to manage longer material lead times, has reduced cash conversion in the first half; however the Board expects full year cash conversion to be in line with its 90% plus guidance.
Notice of Results
Avon Rubber will release its results for the six months ended 31 March 2021 on 25 May 2021.
