Interim Management Statement

RNS Number : 9671W

Avon Rubber PLC

06 August 2009

 



Strictly embargoed until 07:00 6 August 2009

AVON RUBBER p.l.c. ('Avon', the 'Group' or the 'Company')

Interim Management Statement for the period 1 April 2009 to 5 August 2009

Avon has continued to make good progress since the half year. The Group trading performance from continuing operations in the third quarter of our financial year was in line with that seen in the second quarter despite a weaker US dollar. Importantly we have won a further significant order from the US Department of Defence (DoD) valued at $22.3m for the delivery of filters and spares for the M50 mask. 

Protection & Defence

Our Cadillac operation performed well in the period. Deliveries to the DoD were made to schedule and production performance improved. The UK Protection & Defence business continued to benefit from deliveries of S10 masks to the UK MoD under the current £4.5m contract.

Avon ISI is experiencing difficult market conditions. The cost reduction measures taken so far have been insufficient to eliminate operating losses in the quarter. A new General Manager with significant industry experience has been appointed to this business.

Dairy

Avon Dairy Solutions remains a profitable and cash generative part of the Group, despite difficult market conditions. Milk prices remain low with continued lower demand for our products as farmers change their liners less frequently.

Increasing market share for our own brand Milk-Rite products and lower overhead costs in our manufacturing facilities has, however, mitigated some of the impact of the volume reduction.

Operational changes in the UK

On 1 April 2009 we announced our intention to transfer the manufacturing operations for our European Dairy business from Hampton Park West in the UK to a subcontractor in the Czech Republic. This process is progressing well and we expect to recoup the cash costs of the project in approximately two years through annual overhead savings. Following consultation, 68 employees have agreed to take voluntary redundancy. The majority of these employees are expected to have left the Group by the end of the calendar year. The total cash cost of the project is expected to be between £1.5m and £2.0m.

In addition, the Company is implementing new employment terms for all remaining UK employees which includes the closure of the UK Defined Benefit Pension Scheme to future accrual of benefits.

Balance Sheet

Net debt as at 30 June 2009 was £15.0m (30 September 2008: £15.1m). The quarter end exchange rate of $1.63 (compared to $1.84 at the 2008 year end) means that £2.3m has been added to our reported net debt as a result of the translation of our US$ borrowings.

FTSE Sector Classification

Avon Rubber p.l.c. shares are currently listed under the General Industrials FTSE classification. Following the development of the Protection & Defence segment of the Group over the last 18 months, the Company and the FTSE have agreed that it is more appropriate for the Group to be classified as a Defence company within the Aerospace & Defence sector. This change will take effect from 21 September 2009.

Outlook

We are pleased with the Group's progress so far this year and remain confident the outturn for the full year will reflect that progress. Our Protection & Defence order book with the US DoD and UK MoD gives us good visibility of future revenue streams. The opportunity to sell our products in other areas of the world gives us the potential to further enhance revenues and profitability. 

The strength of our Milk-Rite brand and the move of European dairy production to a lower cost location leave us well positioned to take advantage of the opportunities that any improvements in the dairy market will create.

The Rt. Hon. Sir Richard Needham         Peter Slabbert    

Chairman                                                          Chief Executive

6 August 2009                                                  6 August 2009             

Commenting on the results, Peter Slabbert, Chief Executive said: 'Avon has continued to make good progress since the half year. Our Protection and Defence business won a further significant order from the US Department of Defence (DoD) and the strength of our Milk-Rite brand and the move of European dairy production to a lower cost location leave us well positioned to take advantage of the opportunities that any market improvements will create.'

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  For further enquiries, please contact:

Avon Rubber p.l.c.
Peter Slabbert, Chief Executive	01225 896 831
Andrew Lewis, Group Finance Director	01225 896 830
Fiona Stewart, Corporate Communications Executive	01225 896 871
Weber Shandwick Financial
Nick Oborne	020 7067 0700
Clare Thomas

NOTES TO EDITORS: Avon Rubber p.l.c. is a world leader in the design, test and manufacture of advanced Chemical, Biological, Radiological and Nuclear (CBRN) respiratory protection solutions to the worlds military, law enforcement, first responder, emergency services, fire and industrial markets. Avon has a unique capability in CBRN protection based on a range of advanced CBRN technologies in respirator design, filtration and compressed air breathing apparatus. This enables Avon to develop specialised solutions that take full account of user requirements. Avon also owns a world leading dairy business manufacturing liners and tubing for the automated milking process. For further information please visit the Group's website www.avon-rubber.com. 

 

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