Avon Protection profits plunge as it pivots from troubled armour business

The London-listed firm said its adjusted profit before tax plunged 47.6% for the 12 months ended 30 September to $18.9m, as its adjusted basic earnings per share were 38.5% weaker at 60.6 US cents.

It said orders received were ahead 34.9% year-on-year at $282.7m, and its closing order book was 40.6% higher than the prior year at $143.1m.

Revenue grew 16.2% for the 2021 financial year, to $248.3m.

The board said it was hiking the dividend for the year by 30.1% to 44.9 cents, adding that the company swung to net debt of $26.8m, from net cash of $147.7m at the end of the 2020 financial year, excluding lease liabilities.

On a statutory basis, the company swung to an operating loss of $29m from a profit of $8.9m, with its loss before tax coming in at $35.6m, compared to a profit before tax of $2.2m last year.

Avon’s statutory basic losses per share from continuing operations totalled 79.9 cents, swinging from earnings of 12.5 cents per share year-on-year, as its statutory net debt came in at $55.9m, compared to net cash of $118.7m a year ago.

“2021 has regretfully been a challenging year for Avon Protection and our stakeholders, however we have taken decisive action to address the body armour issues and refocus the group as a global leader in respiratory and head protection,” said chief executive officer Paul McDonald.

“Having conducted an in-depth strategic review of our armour business, we have concluded that an orderly wind-down of the body and flat armour business over the next two years to fulfil our existing body and flat armour customer commitments is in the best interest of our stakeholders as a whole.

“While naturally overshadowed by events in armour, we have made further progress during the year against our strategic objectives to deliver sustainable growth.”

McDonald said the company made “significant investment” to further enhance its commercial and operational capability, creating a “scalable platform” to support its medium-term ambitions.

“Alongside this, we have continued to increase our pipeline of opportunities, responded to tenders for long-term contracts worth over $300m and broadened our portfolio of contracts, reinforcing Avon Protection's position as a leading global provider of respiratory and head protection.”

Paul McDonald said that, while the company expected to see continued growth in the 2022 financial year, the 12 months ahead would also be one of transition as the firm began the wind-down of its armour business, and refocussed.

“Supply chain disruption and customer order pattern volatility due to the ongoing Covid-19 pandemic remain part of the backdrop entering the new financial year and so we expect the operating environment to continue to be challenging.

“However, with an opening order book of $117 million excluding armour, we expect our respiratory and head protection businesses to deliver growth in the 2022 financial year and we remain confident in the medium-term prospects for a refocused Avon Protection.”

At 1006 GMT, shares in Avon Protection were down 11.97% at 949p.