Avon Technologies shares slide despite solid first half

(Sharecast News) - Avon Technologies shares were sliding on Wednesday morning, even after it reported a stronger first-half performance on Wednesday, with revenue, profit and margins all rising as the group said its transformation programme was delivering ahead of schedule.

The FTSE 250 defence and protection technology group said revenue for the six months ended 31 March rose 6.8% at constant currency to $160.8m, from $148.7m a year earlier.

Adjusted operating profit increased 39.4% to $24.4m, while adjusted pre-tax profit rose 47.3% to $21.8m.

Adjusted basic earnings per share grew 45.4% to 56.4 cents.

On a statutory basis, operating profit rose to $16.5m from $6.2m, while pre-tax profit increased to $13.5m from $3.1m.

Basic earnings per share rose to 35.0 cents from 8.1 cents.

Avon lifted its interim dividend by 6.6% to 8.1 cents per share.

The company said it had delivered its medium-term targets for growth, margin, return on invested capital and leverage 18 months early, supported by better commercial and manufacturing execution and improved reliability of production rates at its Cleveland facility.

Orders received fell 31.6% at constant currency to $117.9m, while the closing order book declined 11.4% to $219.9m.

Avon said the lower order book reflected the timing of DOD - Trump's so-called 'Department of War' - filter orders and temporary weakness in US commercial helmet demand at Team Wendy.

It said follow-on DOW4 orders were expected towards the end of the calendar year, while US commercial helmet demand was expected to recover in the second half.

Avon said demand was being supported by a heightened global threat environment, with the number of active conflict zones at its highest level since the end of the Second World War, driving product upgrade and replenishment demand.

The group said its strategy was moving from transformation to growth, with continuous improvement programmes driving efficiency, reliability and cost advantage.

It highlighted long-term visibility across core programmes and progress in new and adjacent growth markets, including a multi-year MITR contract from the Canadian Armed Forces, a $14m DOW4 filter order received after the period ended, and a new Middle East military order for its upgraded EXFIL Endurance helmet.

Net debt excluding lease liabilities rose 5.6% to $58.0m, while statutory net debt was broadly stable at $74.2m, compared with $74.7m a year earlier.

Chief executive officer Jos Sclater said the group had delivered a "strong first half performance", with revenue, profit and margin all up significantly.

"Since we launched our STAR strategy three years ago, we have focused on building a stronger, more reliable business underpinned by a culture of continuous improvement," he said.

"Our Strengthen System is improving execution, creating capacity, and generating cash and we are advancing with confidence from stabilisation to growth."

Sclater said demand across Avon's installed base was increasing against a rapidly changing geopolitical backdrop, adding that the company had "strong brands and sales channels, long-term growth visibility and an exciting development pipeline".

Avon said it was firmly on track to meet or exceed full-year 2026 guidance, with growing confidence in second-half delivery and a clear pipeline of opportunities to outperform its core markets.

The group said it would set out new medium-term growth targets with its full-year results.

At 1005 BST, shares in Avon Technologies were down 6.35% at 1,504p.

Reporting by Josh White for Sharecast.com.

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