Avon Rubber PLC
08 September 2006
Embargoed until 0700 8 September 2006
AVON RUBBER PLC
('Avon' or 'the Company')
TRADING UPDATE
Avon Rubber p.l.c. has undertaken significant changes during 2006 and as a
result the Company is issuing this update to aid the understanding of the impact
of these changes before our year end on 30 September.
Automotive
At the time of our interim statement in May we announced the agreement to
dispose of our Automotive businesses. We expected the transaction to be
completed by the end of June and no later than the end of July. As a result of
certain events which we subsequently announced, completion was delayed until 11
August 2006. The delayed completion means that Avon's full year results will
include Automotive's traditionally weaker trading months of July and August, as
well as higher interest charges due to the late receipt of proceeds. Recent
announcements of downturns in the automotive market reinforce the rationale for
exiting this area of our business.
Protection
In our interim statement we reported that we had experienced delays in the
introduction of the newly developed rapid escape hood. Since that time further
slippage has occurred in finalising the necessary approvals. This has delayed
our initial production of this exciting new product. In North America we have
also experienced delays in finalising agreement of the design specification for
the new M50 respirator, which has resulted in a later start to the initial
production.
Both of these products are now in production and we expect to exit this
financial year with the M50 production rates at the level required for the
following financial year and the escape hood being produced at rates necessary
to achieve targeted levels by the end of the first quarter of the 2007 financial
year. Demand for both of these products remains in line with our earlier
estimates. In addition ISI has experienced lower than expected demand due to
delayed allocations of Federal Fire grants. We expect these grants to be
released in October. These various delays have resulted in a deferral rather
than a loss of sales.
Other Businesses
Our dairy business continues to deliver strong operational performance,
particularly in North America. We are also seeing consistent strong operational
performance from our engineered fabrications business in Picayune, Mississippi.
As a result of these various factors our second half trading performance will be
significantly weaker than we anticipated at the time of the interim
announcement.
During the year we have undertaken a major restructuring of the Group. We
disposed of the Automotive businesses, restructured the UK operations as
outlined in the interim statement and, as previously announced, effected the
sale and leaseback of our UK manufacturing site at Hampton Park West. We have
also signed an agreement to sell Zatec, our business machines operation based in
Raynham, Massachusetts. We anticipate that these and other actions are likely to
result in a non-trading charge for the year in excess of the £15.9 million
(pre-tax) charge reported in the interim results.
The 2006 financial year has been a year of major strategic change and, whilst
the results for the year will not be as good as previously anticipated, we are
confident we have put in place the foundations for the exciting growth
opportunities we anticipate over the next few years.
-- End --
For further enquiries, please contact:
Avon Rubber p.l.c 01225 896831
Terry Stead, Chief Executive
Peter Slabbert, Group Finance Director
(Local/Trade Press) 01225 896300
Fiona Stewart
Weber Shandwick | Square Mile 020 7067 0700
Richard Hews / Rachel Taylor / Stephanie Badjonat
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 £50 million.
This information is provided by RNS
The company news service from the London Stock Exchange
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