Trading Update

Avon Rubber PLC 22 March 2001 Avon Rubber p.l.c Trading Update At the Annual General Meeting on January 17th 2001 we reported that the production of cars and other light vehicles in North America had slowed significantly during December 2000 and early January 2001. High stocks of unsold vehicles at our major North American customers, Ford, General Motors and Daimler Chrysler, have resulted in reduced vehicle builds continuing through February and into March at a level some 15-20% lower than the same period last year. The pattern of trading means that our own inventory reduction programmes, like those of our customers, will take longer than anticipated. Lower sales have led us to reduce production and we have continued to take actions to cut costs wherever possible, including the lay off of employees in Mexico and the United States. At the time of the preliminary results statement on 30th November 2000, we announced actions to reduce annual overhead costs for the Group by £5 million. These measures, including the transfer of production from the former Cow Polymers U.K. plant to France and the Czech Republic, have been implemented and will help to mitigate the impact of cost and pricing pressures and lower volumes. Trading conditions, however, continue to be challenging for the remaining U.K. based manufacturing units. We have concluded that more radical rationalisation of our production activities is necessary to make better use of installed capacity globally. This will reduce the requirement for future capital investment. We continue to focus on core activities and will take the appropriate actions for non-core parts of the business including the review of carrying values to identify any necessary provisions for impairment. Approximately half of the Group's business takes place in North America and the impact of the slowdown has resulted in operating profits from the region in the first 5 months of the financial year being substantially below those of the previous year. At this stage it is difficult to forecast volumes for North American Automotive for the second half. In the expectation that car and light commercial vehicle production levels will stabilise following a period of inventory reduction, we currently expect that Group pre-exceptional operating profits will improve during the second half but are unlikely to exceed those for the equivalent period last year. The Group will report its interim results in May when there will be an opportunity to provide a more detailed review of the current trading and business outlook. Enquires to: Avon Rubber p.l.c. Steve Willcox, Chief Executive Tel: 01225 861120 Terry Stead, Group Finance Director Golin/Harris Ludgate Richard Hews Tel: 0207 324 8888 Rachel Child
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