Defence manufacturing group Avon Protection today sought to put a “challenging” 2021 behind it by stressing its revenues were now ahead of the same time last year while it was also tackling its supply chain issues.
The Melksham-headquartered group, which specialises in protective gear, masks and breathing equipment for the military and first-responder markets, said customer demand continued to be robust and, as a result, it remained confident it would achieve its expectations for the current financial year.
Shares in Avon Protection lost around 70% of their value last year – a tough one for the group as it had to overcome damaging delays in military orders from the US.
It also announced the wind-down and closure of its body armour business after it failed tests for the US military.
Its results for the year to the end of September showed it slumping to a pre-tax loss of $35.6m against a $2.2m profit last time, although revenues rose 16.2% to $248.3m.
That prompted chief executive Officer Paul McDonald to admit when they were posted in December: “2021 has regretfully been a challenging year for Avon Protection and our stakeholders.”
In a trading update ahead of its AGM today the group was more upbeat, telling shareholders the while the supply chain disruptions of last year were continuing they were now “largely stable” with mitigating actions continuing to be taken.
Trading had continued as expected and in line with the trends it described in the December’s results announcement with organic revenues in the first quarter ahead of the comparable prior year period.
“Customer demand continues to be robust, however given continued longer order lead times, we expect revenues to be weighted to the second half of the year,” it said.
Actions to reduce costs in light of the announced closure of the armour business had started, with the benefits of these first actions reducing the overhead run rate in the second half.
Last December Avon said closing the business would deal a $46.8m (£35.3m) blow to its balance sheet in its 2021 accounts and lead to a pre-tax loss of $35.6m.
It acquired the business as part of its $91m takeover two years ago of US giant 3M’s ballistics protection business, which also included a protective helmets business.
Avon, which changed its name last year from Avon Rubber, said it continued to see further progress with its framework contract with NATO. Additional orders had been received from the initial six customers, with Latvia becoming the seventh country to order under the framework. Conversations with other nations about joining the programme were continuing.
It also enjoyed success with its MCM100 underwater rebreather, with an initial order from Belgium following a competitive tender, taking the total number of countries buying it to seven.
It also anticipates follow-on orders under its long-term US Deartment of Defense contracts during the first half of the 2022 financial year and it said it had good visibility of a wider pipeline of opportunities in the US and globally for both military and first responder customers.
Meanwhile, delivery of its existing first-generation Integrated Head Protection System (IHPS) helmet continued and it was well advanced in preparations to submit helmets for the first article testing for the next-generation IHPS during the second quarter of its 2022 financial year.
