Avon Rubber's (LON:AVON) interim results show the group is able to deliver a robust performance even in a more challenging market environment. Despite the absence of an impact order in Protection & Defence and Dairy markets being cyclically weak, the group has managed to progress on all fronts, gaining market share, and is well positioned to accelerate growth once again as markets normalise.
Results demonstrate resilience
Avon’s H116 interims show the strategy has created a robust group that can deliver, even in weak market environments. With revenues up 5% to £66.3m, adjusted operating profit up 6% to £9.0m and adjusted PBT up 5% to £8.8m, both divisions made progress despite the challenge of low milk prices and the lack of an impact order. With an effective tax rate of just 1% (2015: 20%) reflecting anticipated geographic split of taxable profits for FY16, the finalisation of 2015 tax returns and a positive tax outcome of certain enquiries, basic EPS was up 29% to 28.7p (2015: 22.3p). Operating cash conversion was high at 163% of operating profit enabling net debt to decrease to £8.4m (£13.2m at end FY15), after £3.5m spent acquiring Argus in October 2015. The interim dividend (3.2p) continues its trend of increasing by 30% as anticipated.
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