Avon Protection lowers full year revenue guidance on delayed orders

 
Melksham, UK – Avon Protection plc has revised down its full-year revenue outlook for the year ending 30 Sept despite a positive demand backdrop. 

Over the 10 months to 31 July, sales came in at $221 million (€187 million), up 13% year-on-year, Avon reported 13 Aug.

However, the impact of delays in the receipt of orders, supply chain disruption and a tight US labour market increased significantly through the second half of the financial year, the UK manufacturer said. 

As a result, the group said it was reducing its revenue guidance for the financial year 2021 to between $245 million - $260 million. 

Avon cited the delayed receipt of roughly $16 million worth of expected orders under existing contracts, including a significant M50 order, as one of the key reasons for the move. The delayed order, Avon said, was due to “procurement bottlenecks.”
 
Furthermore, the group saw a delay in the shipment of $6 million worth of deliveries due to extended lead times for predominantly electronic and textile components.

In addition, the group said uncertainties remained over the timing of receipt of other orders that it expected to receive and ship before the end of the financial year.
 
Due to the lower revenue expectations and “an adverse mix effect”, Avon also lowered its earnings (EBITDA) margin guidance from 22.9% to between 17% - 18% for FY21.

Avon said it was “confident” that the delayed orders would be received over the coming months, but expected supply chain disruption and a tight US labour market to persist into next year. 

As a result, it is also reducing full year 2022 revenue guidance to $320 million - $340 million, whilst maintaining current guidance for FY23.

Avon also noted that the delays to product shipments had also resulted in a build-up of inventory and delayed receipts from customers, saying that the issues were likely to persist through the year-end.

"We have made considerable commercial progress over the last 18 months in building a broad portfolio of significant, multi-year contracts across the business… so the short-term disruption that we are seeing is unwelcome,” said CEO Paul McDonald.

While the issues are expected to be resolved over the coming months, McDonald said they are affecting both Avon customers and suppliers simultaneously.

“The situation has significantly limited our operating agility in the short term,” he added.
 
Despite the setbacks, McDonald said he remained “as confident as ever” about the medium-term prospects of Avon Protection, supported by a “record order book, a growing and visible contract pipeline and world leading businesses and technologies.”