Environmental awareness
Avon Rubber (L:AVON)’s AGM trading update has reconfirmed strong cash generation, but also highlighted a less favourable Q1 environment. With Dairy markets remaining soft as identified at the full year, we are taking a more cautious view on H1 results, leading to a c 4% downgrade to EPS. As usual, the timing of receipt and delivery of impact orders in Protection and Defence will also drive H1:H2 weighting. Longer-term growth opportunities, supported by product development, market expansion and acquisitions, remain and provide substantial upside opportunity.
Protection and Defence goes about its business
Protection and Defence has focused delivery on the core US DoD M50 programme as expected, while timing of impact order receipt and delivery, one of which the company expects to receive during H1, could alter the H1:H2 weighting. As such, this is business as usual in export markets. Integration of the Argus business, acquired in October 2015, has progressed rapidly and smoothly with manufacturing moved to the Melksham facility in December and US approvals currently being undertaken that are likely to benefit H2 results.
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