MELKSHAM, England (Oct. 24, 2008) — Avon Rubber P.L.C. said its Cadillac, Mich., facility has posted a “satisfactory” profit in the final quarter following the substantial resolution of production issues and cost overruns.
The unit suffered earlier in the year following delays to the start of a contract to make the M50 respirator single source for the U.S. Department of Defense.
Net debt reduced to $23.9 million at the year-end from $28.9 million as of June 30 with an improvement in working capital, despite the negative impact on borrowings of a stronger U.S. dollar.
The company said it expects the Michigan unit to improve its profitability as the contract progresses. The unit has orders of $25 million on hand for delivery and further U.S. government funding of $42.6 million approved in 2009 for this 10-year program.
Avon said its Avon-ISI unit, which sells primarily to fire services in the U.S., has not met expectations in difficult market conditions. This, Avon said, "will require us to consider the carrying value of goodwill and intangible assets associated with this business. We also expect to require an increase in the provisions associated with discontinued operations."