Avon Protection improves profitability amid lower sales

Melksham, UK – Avon Protection plc has seen its earnings (EBIDA) improve significantly in the first half its financial year, due in part to an ongoing operational efficiencies programme.

For the six months to end March, the UK manufacturer reported an 80% year-on-year increase in earnings to $11.2 million, on 5% lower sales of $116 million.

Operating profit for the period rose to $4.2 million, up from a negative development $1.2 million the year before.

Avon linked the improvement in profitability to cost reduction, early stages of operational efficiencies and improved product mix.

Revenue decline, said Avon 23 May, was due in part to a “slower than expected” progress in the sales of helmets to the US department of defence.

However, according to CEO Jos Sclater, the Melksham-based group expects the revenue development to be better in the second half of the year.

Sales, he said, will be supported by a strong order book and the progress made against new head protection contracts.

As part of this, Avon has strengthened the factories focused on shipping the first lots of its NG integrated head protection system helmets to the US department of defence.

Touching on the efficiencies programme, Sclater said Avond had “increased the pace of change over the last four months.”

“We taken meaningful steps forward, focusing initially on strengthening the fundamentals with a view to building short term momentum,” he said.

In addition, he went on to say, Avon has developed strategic initiatives to improve the business over the medium term to accelerate growth and improve margins.

For the full year outlook, Avon expects a “good” year-on-year revenue growth in head protection, supported by the strong order intake in the first half.

On the mask systems, the group saw softer demand in the first half, leading to a “more cautious view” on the second-half respiratory revenue.

Overall, the group expects revenue to drop 9% year-on-year for the whole year, reflecting the slow respiratory demand and “some ongoing risk to shipment timings in second half”.

Notwithstanding the lower revenue, the group expects earnings margin to remain 14.7% on a par with last year, due in part to the ‘right sizing’ of its respiratory unit.