# Avon Rubber second quarter continued to be strong with ongoing positive momentum

- Link: https://www.directorstalkinterviews.com/avon-rubber-second-quarter-continued-to-be-strong-with-ongoing-positive-momentum/412975458
- Published: 2021-04-09T07:32:41+01:00
- Author: Giles

**Avon Rubber p.l.c.** (LON:AVON) has today provided the following trading update
for its current financial year ending 30 September 2021.

**Summary**

Further to the AGM update on 29 January 2021, trading in the second quarter continued
to be strong with ongoing positive momentum and continued strong order intake across
our portfolio of life critical personal protection systems for the world’s militaries
and first responders. The Group expects to report revenue of $122 million for the
first half (H1 2020: $87 million), including a first-time contribution from Team
Wendy of $20m during the first five months of ownership. 

As a result and taking into account the current order book of $155m and expected
order intake in the second half, the Board remains confident of achieving its expectations
for the current financial year. 

**Military**

Within our Military business, revenues increased by 16% year-on-year driven by strong
growth in respiratory protection.  Orders received in the first half were up 30%,
including $38 million of initial orders under the NATO Support & Procurement Agency
contract, $17 million under the U.S. Department of Defense M69 aircrew mask system
contract and the recently announced $19 million order under the existing U.S. Army
Integrated Head Protection System (“IHPS”) contract.

We expect the U.S. Army to commence the tender process for a multi-year, multi-source
full rate production contract for the next generation IHPS during the second half
of our current financial year. We believe our product continues to represent the
optimal solution for the customer and that the tender process will provide medium
term visibility for the IHPS programme.

We are in the process of finalising revised designs for the U.S. Defense Logistics
Agency Enhanced Small Arms Protective Inserts (“DLA ESAPI”) contract with the customer
and remain on schedule to complete first article testing during the second half 
of the year with first deliveries expected to commence in the first half of our 
2022 financial year.

**First Responder**

Within our First Responder business, we have continued to see strong demand across
our entire respiratory and ballistic protection range with revenues increasing by
19% year-on-year in the first half and orders received up 29% . We have also continued
to see a strong pipeline of opportunities to further broaden our customer base across
both our respiratory and ballistic product portfolios.

**Team Wendy**

Team Wendy has continued to perform well and in line with expectations in the first
five months of ownership with continuing strong order intake.

**Financial Update**

The Group’s financial position remains strong, with net debt before lease liabilities
of $13 million at 31 March 2021, representing leverage of less than 0.2x consensus
EBITDA for the current financial year.

The weighting of revenues to the second half of the year, together with increased
inventory holdings to manage longer material lead times, has reduced cash conversion
in the first half; however the Board expects full year cash conversion to be in 
line with its 90% plus guidance.

**Notice of Results**

Avon Rubber will release its results for the six months ended 31 March 2021 on 25
May 2021.

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