Shares in manufacturer Avon Rubber leapt by more than 11% today after the Melksham-based firm issued an upbeat trading statement and revealed it had won a $9m (£6.77m) contract in the US.
The firm, which makes gas masks and respirators for the military and emergency services and rubber products for the global dairy industry, said it expected its full-year pre-tax profits to be in line with current market expectations. The comments – and new order announcement – triggered a bounce back for the shares, which fell sharply earlier this year on concerns over its trading outlook.
The new US order mentioned in today’s trading update, covering the five months to the end of August, is from an unnamed major city police department for Avon’s latest Chemical, Biological, Radiological and Nuclear (CBRN) escape hood.
Made by Avon’s Protection & Defence division, the device recently received approval from the National Institute for Occupational Safety and Health (NIOSH), the US federal agency responsible for conducting research and making recommendations for the prevention of work-related injury and illness.
The majority of the hoods for the US city will be delivered this financial year, Avon said.
It said it continued to see a number of higher margin export opportunities for military masks although the timing of order receipt was unpredictable.
“These opportunities remain live and are being progressed, albeit more slowly than previously expected, with the result that we now expect to receive and deliver these orders in our 2017 financial year,” it said in its update.
During the period, mask systems production had been focused on fulfilling deliveries to the US Department of Defense under its 10-year sole source contract for its JSGPM M50 product.
Avon’s Dairy division experienced mixed fortunes during the five months, with general market conditions for dairy farmers remaining weak for most of the period as milk prices stayed low.
“This cyclical market dynamic has, as expected, reduced demand for our consumable products as farmers overuse product to extend its life,” Avon said.
However, milk prices in its major markets appeared to have bottomed-out and have started to improve in the final quarter, it added, while the US market offered new opportunities.
Group CEO Rob Rennie said: “The 2016 result demonstrates the robustness of our business and we exit the year as a stronger business looking forward to the many opportunities available to us in 2017.”
Avon’s share price climbed by 11.24% to 930p this morning – putting the firm at the top of the risers’ board for the FTSE All-Share index. The shares dropped sharply in January after it warned of the likely impact of a ‘softer’ milk market on its Diary division at its AGM.
A number of brokers have upgraded Avon’s shares to ‘strong buy’ and ‘buy’ status over recent weeks.
Avon’s full-year results for the year to September 30 will be announced on November 16.
