Avon Rubber designs, develops and manufactures products in the protection (70% FY18 sales) and dairy (30%) sectors. Its major contracts are with national security organisations such as the US DoD. Over 70% of 2018 sales were from the US.
Avon is delivering growth validating the new business strategy to grow the core, add selective product development and make value-enhancing acquisitions to accelerate growth. At H119, guidance was maintained after a slow start. The latest mask orders are accelerating Avon Protection’s growth and more than compensating for the weaker than expected milkrite | InterPuls performance. Success at Protection is flowing from the enhanced product portfolio as orders build visibility. The recent multi-year contracts have received initial supply orders that will boost H219 Military revenues and build momentum into FY20.
Avon’s long-standing, multi-level relationship with the US DoD is important to the group and the end market backdrop is supportive. The active dialogue for the M50 replenishment phase should extend the programme for at least another 15 years, plus a focus on higher price sophisticated mask systems provides a further opportunity. Meanwhile, growth has been encouraging in Farm Services, building greater visibility into the business. We maintain our view that Avon has the market position, product portfolio and strategic ambition to further accelerate its growth through organic and inorganic means.