Avon Protection Regulatory News (AVON)

19 Jan 2006 07:01

Avon Rubber PLC19 January 2006 Embargoed until 7.00am19 January 2006 Avon Rubber p.l.c. CHAIRMAN'S STATEMENT FOR AGM At the Annual General Meeting to be held later today, the Chairman, Mr. TrevorBonner, will make the following statement:- "At the time of our Preliminary Statement in early December 2005 we said thatthe Group was in a period of transition. We noted that our Automotive operationswere performing well despite the tough market conditions and that we had anexciting new range of products coming through in our Protection and EngineeredProducts businesses. We also indicated that we expected our continuedinvestment, particularly in the future Protection and Engineered Productsopportunities to deliver enhanced performance over the next two to three years.This remains the case. We have continued to see increased energy and rawmaterial costs. However, we have taken actions to reduce our other overheadcosts, continue to do so through this period of transition and will maintain ouremphasis on strong cash management. Automotive is a tough global market. We are committed to remaining competitive.To achieve this we will continue to strive to have the best manufacturingsystems and processes and move more of our manufacturing to lower labour costareas. As part of this approach in the last twelve months we have closed thefacility in Calaf, Spain, whilst in the same period investing in a new lowercost manufacturing unit in Turkey. Our goal is to achieve our objectives withoutsuffering the substantial exceptional cash costs that we have in the past. In North America the overall automotive market has remained fairly robust withtotal sales of vehicles in 2005 marginally higher than in 2004. However, five ofthe top six manufacturers saw volume reductions, as the "new domestic" carmanufacturers continue to take market share from the established "big three".Our sales in the first quarter of our financial year have remained at similarlevels to last year. We have seen continued strong demand for our GREENbarTMproduct for the small engine market and our operation in Orizaba, Mexicocontinued to grow as it wins more business. We are seeing some reduction indemand in our second quarter but expect sales to return to previous levels inthe second half. In Europe we are seeing a consolidation of our improved performance from thelast financial year. The new global Automotive structure has resulted in abetter focus on customer needs and as a result we are beginning to win neworders for future years. We are at the point of moving equipment into the newfacility in Turkey and expect production to start there during the early part of2006. In Protection and Engineered Products a major strategic review has beenundertaken in the areas of business outside Protection during the past sixmonths. This work is nearly complete and we would expect to start theimplementation of the revised strategy over the next few months. We continue to see the Protection business as one of great opportunity. We arestarting the production phase of the new US military respirator (now called theM50) and have already produced a number of the M53 variant of this product. Weexpect to receive final European approvals for our newly developed Rapid EscapeHood this month and anticipate moving straight into production with salesstarting as early as February. We have been selected as the preferred supplierto the UK emergency services, subject to these approvals. All our governmentbased new contracts are seeing some degree of slippage for initial introductionwhich will delay the growth in our Protection business in the first half. Sales of dairy rubberware in North America continue at a consistently high leveland we expect this to remain the case. In Europe we have seen some decline insales over the last twelve months and are at present reconsidering the mostappropriate channels to market. We believe, with our product range and ourtechnical expertise, the dairy business has real potential to grow into a stronginternational business. The order book at our fabrications business in Mississippi remains buoyant andwe expect this to result in a stronger financial performance in 2006. We shall continue to address the cost base in the UK operations of Protectionand Engineered Products as we do not believe we are making acceptable returnsfor these types of business. Based on current trading and demand the outcome in the first half is unlikely tobe better than the pre-exceptional result for the corresponding period last yearon a UK GAAP basis. We anticipate a significant improvement in the second halfas we start to see an increased contribution coming from our growing Protectionactivities." - END - For further enquiries please contact: Weber Shandwick Square MileRichards Hews / Stephanie Badjonat 020 7067 0700 This information is provided by RNS The company news service from the London Stock Exchange