Avon Protection closes financial year with improved margins

MELKSHAM, U.K.—Avon Protection P.L.C. has closed its financial year—ended Sept. 30—on a strong note with orders showing growth of 10 percent year-on-year.

Reflecting "good strategic progress", the United Kingdom-based protection gear supplier also expects a stronger second half and higher underlying earnings, it added in a trading update.

In particular, the Melksham group is seeing strong demand for helmets, offsetting expected softness in respiratory equipment demand.

"We now have $59 million of outstanding orders for next-generation integrated head protection system (NG IHPS) helmets," the company said in its Oct. 13 update.

Furthermore, the group has recently won a delivery order worth over $7 million for its Gen II combat helmet, bringing total outstanding orders for the product to over $20 million.

Overall, Avon said, sales—excluding its discontinued armors unit—had improved significantly since the first half. This uptick, it said, was mainly due to the ramp-up of its NG IHPS program, as well as the shipment of a previously announced, large respiratory masks order.

However, adjusted operating profit margin for the final six months of the year remained "broadly flat" compared to the first half, Avon reported.

The company also reduced its net debt to two times earnings (EBITDA), compared to 2.6 times earnings at the end of the first half. This improvement, the company said, was due mainly to the exit from the armor business.

Meanwhile, the company is delivering a "more reliable financial performance" as a result of actions to improve operations and program management, Avon CEO Jos Sclater said.

Avon has previously announced plans to introduce a new operating model with the creation of two business units: respiratory protection and head protection. In its trading update, Avon said this restructuring is now complete with both business units "fully resourced and internal performance management and reporting structures in place."