Avon says Ukraine war highlighted ‘criticality of products’
6 Apr 2022
Company in active discussions for potential incremental orders
Melksham, UK – The recent events in Ukraine have highlighted the criticality of Avon Protection’s products with a “notable increase” in customer enquiry activity, the company has announced in a trading update.
“We have a number of active discussions ongoing with customers regarding potential incremental orders across both respiratory and helmet products,” Avon announced 6 April.
The UK manufacturer said it expected to see the impact of the ongoing discussions and their resultant orders on its performance in the financial year 2023, starting September.
Over the first six months of the current financial year, Avon said some of the previous year challenges continued but performance ‘accelerated’ through the second quarter.
Order intake was lower than the comparable period last year reflecting a very strong first half in 2021.
“But, following the events in Ukraine, enquiries remain robust giving us confidence in order intake for the second half and beyond,” it added.
Revenue for the six months ending 31 March was in line with expectations and ahead overall by around 4% from last year' $122 million (€112 million).
Profitability has however been impacted by a weaker than expected sales mix in the first half and additional manufacturing costs, notably in the helmets business, due to supply chain and process inefficiencies.
As a result, Avon said the adjusted earnings (EBITDA) margin for the period is expected to be approximately 10%, compared to 19.7% reported last year.
Operationally, Avon said it had made “good progress” on the implementation of the $15-million overhead cost saving programme announced in December 2021.
Of that amount, approximately half relates to overheads in the armour business, from which Avon is exiting.
In addition, the company said it closed one of its US offices and changed management structure to streamline the organisation into “one focussed business.”
In the second half of the year, Avon said it expects profitability to improve but will not offset the weakness experienced in the first six months of the year.
“Full year underlying earnings will therefore be lower than previously expected,” it added.