Avon Rubber PLC
02 April 2007
Embargoed until 2 April 2007 at 07.00
AVON RUBBER p.l.c.
('Avon' or 'the Company')
TRADING UPDATE
In the light of the forthcoming requirements which will increase the frequency
of market reporting and the significant changes in the Group recently, the
Company is issuing this update in respect of the half year ending on 31 March
2007.
Protection
We have made significant progress in our new M50 respirator and filter
production facility in Cadillac Michigan. The Low Rate Initial Production order
(LRIP) for the US Department of Defense has been successfully completed and, as
indicated in the Chairman's AGM statement of 25 January 2007, we have received
follow on orders. We experienced some excess cost in delivering the LRIP and as
a result have made changes to the organisation to address this. We are already
seeing the benefits of these changes. We remain confident that further orders
will be received enabling us to continue production at current levels for the
remainder of the financial year.
In our AGM statement we noted that demand at ISI has continued to be lower than
expected due to delayed release of federal funding grants. This has continued to
be the case despite grants starting to be released in late 2006. We believe that
some of the delay in utilising these grants may be due to fire departments
waiting for the introduction of new National Fire Protection Association (NFPA)
standards for breathing apparatus, effective from 31 August 2007. We still
expect some improvement in performance from ISI in the second half, but at a
slower rate than previously anticipated.
Despite significant sales to the National Health Service, we have only seen low
volumes of sales of our new Rapid Escape Hood to law enforcement agencies.
Changes in Government procurement arrangements and budget allocations have
delayed the expected subsequent high volume demand. The resulting shortfalls
have, however, been offset by continuing strong demand for our legacy S10 and
FM12 respirators.
Dairy
Our dairy rubberware business is performing to expectations. In North America we
have maintained our strong market position. In Europe sales have grown
particularly in the higher margin aftermarket business. We also remain focused
on identifying and benefiting from new geographic markets for these products.
Other Businesses
Our Engineered Fabrications business in the USA has continued to grow sales and
improve operational performance with an expectation that this will continue.
Progress in our UK based Aerosol gaskets operation has however been limited by
the effect of the weaker US dollar which will also have an impact on the
translation of our North American earnings.
Our expectation of a return to profitability in the first half year remains
unchanged. This would represent a significantly improved result compared to the
£3.3 million loss incurred by our continuing businesses in the second half of
2006. As we noted in the AGM statement, our short-term challenge is predicting
the timing and rate of growth of the respiratory protection business. However,
we remain confident that this area represents an opportunity for exciting growth
in both the near future and longer term.
-- ENDS --
For further enquiries please contact:
Avon Rubber p.l.c. 01225 896831
Terry Stead, Chief Executive
Peter Slabbert, Group Finance Director
Weber Shandwick Financial 020 7067 0700
Richard Hews
Rachel Taylor
Hannah Marwood
NOTES TO EDITORS:
Avon Rubber p.l.c. is an international polymer engineering group adding value
through material, manufacturing and industry sector expertise. The Group is
currently capitalised at approximately £51 million.
This information is provided by RNS
The company news service from the London Stock Exchange
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