Avon Rubber (LON:AVON) started FY18 with a new growth strategy and it is bearing fruit. Order growth is strong as the company is leveraging market dynamics across both divisions. We adjust our forecasts for the more favourable US tax reform, increasing underlying EPS by 7% and 1% in FY18 and FY19 respectively. Management is confident of achieving FY18 expectations.
Order momentum
As we reported at the start of the week (Positive order progression), order momentum in the first four months of the year at Avon has been encouraging and is building visibility. In addition to order success with existing products (eg M50), Avon Protection secured its first commercial orders for its MCM100 underwater rebreather, increasing the product portfolio of the business. Powered Air product sales have grown in Europe for law enforcement markets and securing NIOSH safety standards in Q218 will set the groundwork to build sales in the US market. For milkrite I InterPuls, lower feed prices have offset milk price softness. An improved investment backdrop is driving revenue growth in Precision Control & Intelligence and Farm Services, the latter at an exciting time with service launches.
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