MELKSHAM, England—Avon Rubber P.L.C. has warned that the continued strength of the English pound against the dollar will impact its results for the current financial year.
If exchange rates remained unchanged for the rest of the year, Avon expects the currency factor to reduce revenue and adjusted operating profit by 8 percent.
This compares to previously forecast reductions in sales and earnings of around 3 percent, the maker of rubber-based products noted in a Feb. 1 trading update.
Investors were, likely, somewhat reassured by positive comments from Avon regarding its order books and the benefits of recent U.S. tax reforms. For the current financial year, the effective U.S. tax rate is anticipated to be down to around 14 percent—reflecting one-off factors—and 19 percent in future years, Avon said.
Overall, Avon said its current-year expectations remain on-track, with a positive start to the financial year and the continued strong order intake. It also reported a positive start to its financial year with trading in the four months to Jan. 31 in line with forecasts.
Order intake at the group's Avon Protection unit had remained strong and military business has building on a positive start to the year, Avon said.
Orders from the U.S. Department of Defense have secured anticipated sales of M50 mask systems for the current year, the company added.
Avon's "rest of the world" military business has, meanwhile, noted promising demand for an "underwater rebreather" and recently launched "powered air" products.
There also was significant growth in orders for law enforcement products, including "powered air" products across the globe.
At Avon's Dairy division, market conditions have remained positive in the year to date, with milk price softness being offset by lower feed prices