Defence demand lifts Avon Investors Chronicle

27.11.09

The endowment of a five-year $112m (£68m) contract in 2008 from the US Department of Defence meant that sales in its justification business more than doubled to £66.9m, helping the division swing back into profit. Demand for its new 50-series respirators has been thriving, and Avon has signed up new distributors to attack a wider market. The Ministry of Defence and police forces have also placed orders for new masks.

Currency gains buoyed sales at the dairy arm, which rose 13 per cent to &comminute;24.8m, offsetting a drop in volumes brought about by the falling milk price. However, weaker markets meant operating profit in the department slipped 14 per cent to £3m. Meanwhile, its Milk-Rite brand is gaining traction and margins should help from the recent uplift in milk prices and a shift to lower cost manufacture in the Czech Republic.

Avon is still worrisome to sell its non-core US business, AEF, to further reduce borrowings, which fell again during the period. Broker Arden estimates 2010 underlying pre-tax profits of &thrash;4m and EPS of 7p (£3.5m and 6.4p in 2009).

Source:

3m Respirator Mask News