TIDMAVON
RNS Number : 3970H
Avon Protection PLC
06 April 2022
6 April 2022
Avon Protection plc
Post Close Half Year Trading Update
Avon Protection plc ("Avon Protection" or "the Group") today
provides the following trading update for the six months ended 31
March 2022 ("HY22" or the "Period"). Unless otherwise stated,
figures and commentary exclude the armor business.
Trading update
Trading in the first half reflects a continuation of some of the
challenges seen in FY21, but with performance accelerating through
the second quarter. Order intake was, as expected, lower than the
comparable period last year reflecting a very strong first half in
2021, but, following the events in Ukraine, enquiries remain robust
giving us confidence in order intake for the second half and
beyond. Revenue for the Period was in line with expectations and
ahead overall by c. 4 %, with organic year-on-year performance
broadly flat.
Profitability has however been impacted, in broadly even
proportions, by a weaker than expected sales mix in the first half
and additional manufacturing costs, notably in the helmets
business, due to supply chain and process inefficiencies. As a
result, the adjusted EBITDA margin for the period is expected to be
approximately 10%.
Operationally, we have made good progress on the implementation
of the $15m overhead cost saving programme announced in December
2021 (of which approximately half relates to overheads in the armor
business and the remainder relates to the rest of the Group),
including the closure of one of our U.S. offices and a change in
management structure which streamlines the organisation into one
focussed business.
Strategically, we are pleased with our continued progress, which
includes the award of the U.S. DLA contract for the
second-generation Advanced Combat Helmet in February and delivery
of the next-generation Integrated Head Protection System for first
article test scheduled for Q3. This momentum further reinforces our
position as a leading provider of head protection to the U.S.
military and provides a strong platform for future growth.
Outlook
The recent events in Ukraine have highlighted the criticality of
our products and capabilities, and we have seen a notable increase
in customer enquiry activity.
We have a number of active discussions ongoing with customers
regarding potential incremental orders across both respiratory and
helmet products. While these discussions remain ongoing and the
quantum and timing of resultant orders are still to be determined,
t he impact of this growth in demand is most likely to be seen in
FY23 and beyond, and as such the Board continues to have a range of
expected full year revenue outcomes for FY22 consistent with market
expectations.
Profitability in H2 is expected to improve versus H1 but will
not offset the weakness experienced in the Period. Full year
underlying earnings will therefore be lower than previously
expected.
The second half margin will benefit from the adverse mix impact
substantially unwinding along with the operational gearing effect
of higher revenues and the initial contribution from the cost
saving initiatives. The manufacturing inefficiencies described
above are expected to improve as higher volumes are achieved. As a
result, the Board expects EBITDA margins to recover progressively
through the second half of the financial year and beyond, with the
extent of this improvement in part dependent on the quantum and
timing of incremental orders. Looking forward into FY23, the
Group's profitability will benefit from the improved FY22 exit
run-rate and the full year effect of the cost savings.
Armor business
In the period, as expected, armor revenues were in the low
single digit $m pending final sign-off of first article testing of
the DLA ESAPI body armor product. Combined with overheads, this
business therefore operated at an EBITDA loss in the first half. We
have continued with our steps for an orderly exit of this business
once existing contracts are satisfied.
Commenting, Paul McDonald, Chief Executive Officer, said:
" At Avon Protection, our purpose is to protect people and save
lives. As a global leader in military-grade respiratory and head
protection, we are seeing an increased demand for our products for
both the short and longer term. We are working proactively with our
key customers to confirm their requirements and maximise our
available capacity in the short term. Longer term, this will create
further opportunities and will likely result in mid-term capacity
expansion to meet expected demand."
Notice of Results
The Group will release its results for the half year ended 31
March 2022 on 24 May 2022.
For further enquiries, please contact:
Avon Protection plc
Paul McDonald, Chief Executive Officer 01225 896 848
Rich Cashin, Chief Financial Officer
Rachel Stevens, Director of Investor Relations
MHP Communications
Andrew Jaques 0203 128 8570
Charlie Barker avonprotection@mhpc.com
Pete Lambie
Legal Entity Identifier: 213800JM1AN62REBWA71
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) ("MAR") prior to its release as part
of this announcement and is disclosed in accordance with the
Company's obligations under Article 17 of those Regulations.
Note to editors:
Avon Protection designs and produces life critical personal
protection solutions for the world's militaries and first
responders. With a portfolio that includes Chemical, Biological,
Radiological, Nuclear ("CBRN"), respiratory and head protection
products, Avon Protection's mission is to relentlessly advance the
future of protection enhancing the performance, efficiency and
capability of their customers whilst providing ever increasing
levels of protection.
Avon Protection operates from six locations employing
approximately 1,000 people and is listed on the London Stock
Exchange (LSE: AVON).
For further information, please visit our website
www.avon-protection-plc.com .
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