Avon profits rise on lower revenues in full year

ERJ staff report (DS)

London -- Avon Rubber PLC said pre-tax profits for the 12 months to 30 September rose to £10.2 million (euro 11.8 million) compared with £7.1 million reported a year ago. revenues fell slightly, to £107.6 million compared with £117.6 million. As a result, the operating margin increased to 10.3 percent from just 2.4 percent a year ago. The company operates two main divisions: Protection and Defence, which generated 72 percent of group revenues and the Dairy business, which makes a range of products, including rubber mats to protect the feet of cows.

The company earns its revenues from US markets, especially in the defence industry. The Protection & Defence now represents 72 percent (2010: 77 percent) of total Group revenues. For the 12 months, divisional revenue was down 14 percent to £77.4m (2010: £90.2m) due to lower revenue at Avon Engineered Fabrications (down £15m) as a result of lower Department of Defence (DoD) orders for fuel and water storage tanks.

Revenues for the Dairy business were up 10 percent at £30.2m (2010: £27.4m) which generated an operating profit of £5.5m (2010: £4.6m). EBITDA was £5.9m (2010: £5.0m), giving a return on sales (as defined above) of 19.6 percent, up from 18.3 percent in 2010.

Avon said, "The improved profitability in our Dairy business resulted from the full year benefit of the outsourcing of European manufacturing and growth in our own brand, Milk-Rite in both North America and Europe. Increased market share in the US for our revolutionary Impulse mouthpiece vented liner (IP-MV), launched in 2010 and which had achieved an 8 percent market share in North America by the end of 2011, also enhanced profitability."

Peter Slabbert, Chief Executive said: "Our strategy of developing both our rapidly growing Protection & Defence business and our high margin and cash generative Dairy business has proved successful. Despite an uncertain outlook for global defence spending we expect to make further progress and accordingly have accelerated our investment in new product development."

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Press release from Avon Rubber