(Alliance News) - Shares in Avon Protection PLC plunged on Wednesday, after it said annual earnings were likely to come in lower than previous expectations.
The Wiltshire, England-based personal protection company said profit in its year ending September 30 will come in lower than forecast, after half-year earnings were hit by various factors.
Shares in Avon Protection dropped 23% to 1,015.00 pence each in London on Wednesday morning, having dropped 70% over the past 12 months.
Avon said a weaker-than-expect sales mix in its half year ended March 31, as well as additional costs stemming from supply chain issues and inefficiencies in its processes have squeezed its margin. The arnings before interest, tax, depreciation and amortisation margin is expected around 10% for the period. It expects profit and margin to improve over its second half, but does not expect to make up the deficit from the first half.
This was despite revenue for the period being in line with expectations, and ahead overall by around 4% year-on-year, or broadly flat on an organic basis.
More positively, Avon reports customer enquires are "robust", with a notable increase since the outbreak of war in Ukraine.
"We have a number of active discussions ongoing with customers regarding potential incremental orders across both respiratory and helmet products. While these discussions remain ongoing and the quantum and timing of resultant orders are still to be determined, the impact of this growth in demand is most likely to be seen in financial 2023 and beyond," the company said.
It expects revenue in the current financial year to be consistent with market expectations.
"We are working proactively with our key customers to confirm their requirements and maximise our available capacity in the short term. Longer term, this will create further opportunities and will likely result in mid-term capacity expansion to meet expected demand," said Chief Executive Officer Paul McDonald.
Results for Avon's half-year will be released on May 24.
By Elizabeth Winter; elizabethwinter@alliancenews.com
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Avon Protection (AVON)