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Avon Rubber (AVON)

Business description

Avon Rubber designs, develops and manufactures products in the protection (70% FY17 sales) and dairy (30%) sectors. Its major contracts are with national security and safety organisations such as the DoD. Sales are 75% from the US and 25% from Europe.

Stock data

Market cap.£414.2m
Last close1,335.00p
High / Low (52 weeks)1475.0p / 909.0p
Stock market listingLN
Forecast net cash (£m)49.7
Forecast gearing ratio (%)N/A
TeamIndustrials
SectorAerospace & Defence

Price performance

%1m3m12m
Actual(4.6)(6)32.2
Relative *(3.9)(3.8)29.7

* % Relative to local index

Other companies in sector Show

Company news

Y/E Sep Revenue (£m) EBITDA (£m) PBT (£m) EPS (p) P/E (x) P/CF (x)
2016A 142.9 29.9 20.7 70.5 18.9 13.3
2017A 159.2 36.3 25.9 83.3 16.0 13.6
2018E 159.3 36.3 26.5 74.3 18.0 11.4
2019E 165.1 38.4 28.5 75.3 17.7 11.5

Last updated on 18/07/2018

Investment summary

Avon started the year with a new growth strategy and the H118 report showed that it is bearing fruit. The enhanced product portfolio is driving order growth in both divisions. Cash performance has also been solid, which underpins selective future acquisitions, while the disposal of AEF adds c £6m to cash. FX headwinds were visible in H118 given US exposure, however management maintained guidance for the full year. Overall, the approach is to grow the core, add selective product development and make value-enhancing acquisitions to accelerate growth.

Last updated on 27/07/2018

Industry outlook

The US defence budget environment looks promising for Avon as it increases army troop numbers, while order activity has picked up closer to home. Avon is increasingly focused on higher price sophisticated mask systems. Meanwhile, growth has been encouraging in Farm Services, building greater visibility into the business. We maintain our view that Avon has the market position, product portfolio and strategic ambition to further accelerate its growth through organic and inorganic means.

Last updated on 27/07/2018

Key management

David Evans, Chairman
Paul McDonald, CEO
Nick Keveth, CFO

Company address

Hampton Park West
Semington Road
Melksham
Wiltshire
SN12 6NB
United Kingdom
+44 (0)1225 896800.
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