Strong cash conversion at Avon Rubber

Avon Rubber, which counts farmers and the military among its customers, said both its Dairy and its Protection and Defence divisions saw top line growth in the first half of the group's financial year.Revenue in the six months to March 31st rose 3% to £49.6m from £48.0m at the half-way point last year. The Protection & Defence unit's revenue rose to £33.2m from £32.7m the year before, while revenues for the Dairy business were up 7% at £16.4m from £15.4m last year.Group profit before tax edged up to £4.6m from £4.4m, while fully diluted earnings per share were up 8% at 10.8p from 10p at the interim stage last year.Net debt decreased from £11.8m at the 2011 year end to £9.8m at March 31st 2012. This has been driven by a 126% conversion of operating profit to operating cash inflow, offset by capital expenditure of £3.6m (2011: £2.1m) as the group's investment in Project Fusion - its new development programme - continues and the establishment of its Dairy sales and distribution facility in China was completed."We are accelerating investment in Project Fusion's new products and technologies which will support an expanded product range. We also expect to continue to deliver further operational efficiencies," revealed Peter Slabbert, Avon's Chief Executive.The Protection & Defence business has benefited from increased mask system orders from the US Department of Defense (DoD) and better operational performance. Non-DoD business during the period was slightly weaker than the strong comparable period last year, but non-DoD order intake overall was comparatively strong at £22.4m (2011: £5.4m). The profitability of the Dairy business has improved significantly year on year, reflecting stable market conditions and the continued growth of Avon's higher margin IP-MV liner, which has now achieved a greater than 10% market share in North America. This success has allowed Avon to add capability to the division's management team and to invest in China, which together added £0.3m to overheads in the period, or £0.8m on an annualised basis.The interim dividend has been hiked by 20% to 1.2p from a penny the year before. The shares have been on the recovery path since the middle of April, when they bottomed out at a few pence above 260p having fallen from 320p at the beginning of March, and that revival continued on the day of the results, with the shares rising 4.75p to 287.5p, having hit 295p at one stage during the day. JH Avon Protection