Chairman's Statement for AGM

Avon Rubber PLC
20 January 2005


Embargoed for 10.30am
Thursday 20th January 2005

                               Avon Rubber p.l.c.

                          CHAIRMAN'S STATEMENT FOR AGM

At the time of our preliminary statement in early December 2004 we said that we
expected challenging conditions to prevail in most of our markets, particularly
during the first half. This has proved to be the case overall and trading in the
first quarter of our new financial year has been in line with our expectations.
We have already taken actions that are helping to compensate for the increased
energy and raw material costs that continue to affect all companies with oil and
steel based inputs.

The picture in European automotive has been mixed. Sales of hoses, particularly
for the growing volumes of diesel vehicles, are offsetting reduced sales of
vibration management products to MG Rover. The Group will seek to access growth
opportunities in Turkey by establishing a hose production unit to meet local
market requirements from our international automotive customers.

In North America the 'new domestic' car manufacturers continue to take market
share from the established 'Big 3' and our own sales reflect a growing
proportion of business supplied to those 'new domestic' manufacturers. Total
sales of light vehicles in North America have stayed at reasonable levels with
annualised rates of 16.5 to 17 million vehicles, while production has been
reduced to balance inventories on certain models.

As expected, sales of respiratory protection products have returned to lower
levels following the high volumes seen in 2003 and the first half of 2004 and
prior to the launch of our new generation masks over the next 12 months. This
reduction in respirator sales is only partly offset by improvements elsewhere
within the Technical Products Division. Our other defence related products are
benefiting from strong demand, particularly where rapid deployment is required,
including relief support in South East Asia. This has led to increased demand
for hovercraft skirts and lightweight liquid storage tanks produced in our now
wholly-owned engineered fabrications business in Mississippi.

User trials of the Joint Services General Purpose Mask (JSGPM) for the U.S.
Department of Defense are close to completion as we jointly finalise the design
for production standard respirators. The programme continues in line with the
original plan which calls for initial production during the final quarter of
2005 at a rate of 100,000 per annum and ramping up of volumes to over 200,000
per annum in 2006/07. This contract provides a substantial base for our new
Protection Division which will seek other orders for the JSGPM mask and exploit
our world-class reputation in respiratory protection products.

Sales of dairy rubberware in North America continue at good levels supported by
higher milk prices. European dairy component sales to the aftermarket continue
to grow and original equipment sales, which were weak in the first quarter, are
showing signs of recovery. Business machine components continue the improving
trends of recent months, particularly in Europe.

As we have already announced, we intend to carry out a reorganisation in order
to further improve our cost base and thereby achieve better margins. While all
parts of the Group have been subject to review, the most significant changes
will take place in Europe and particularly in our European automotive activities
where we shall seek to improve the balance between our capacity and demand for
particular product lines. While demand for advanced polymer products in western
Europe is strengthening, we expect to consolidate manufacture of water hose
products in the region into fewer locations.

The reorganisation will result in exceptional cash costs of around £3.6 million
with a total charge of £6 million this year including associated write-offs. The
benefits are expected to be around £3 million p.a. and will begin to take effect
during the second half of the current year.

The relative weakness of the US dollar provides some opportunities to offset
higher material prices but affects the translation of sales and profit from our
US subsidiaries. However, reported net debt benefits from the translation of the
weaker US dollar exchange rate. Further reduction in borrowings remains a focus
of our strategy to create shareholder value.

We expect the second quarter to show an improvement over the first quarter, but
sales and profit before taxation and exceptional items in the first half will be
below those of the corresponding period in the previous year. Actions already
taken, together with those planned, are expected to result in an improved second
half performance and a full year profit before taxation and exceptional items in
line with current market expectations.

                                    - END -

Enquiries:

Avon Rubber p.l.c.
Jayne Hunt, Group Communications & PR                        [phone]

Weber Shandwick Square Mile
Richard Hews/Rachel Taylor/Stephanie Badjonat                      020 7067 0700





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