Shares Watch: Avon Rubber plc

Avon Rubber plc is expecting a strong second half to its financial year, but the supplier of technical rubber components and systems will do well to maintain its business momentum of recent months.

Melksham-based Avon Rubber is a rubber-technology-based design and engineering group specialising in two core business markets, Protection & Defence and Dairy.

Shares in the company were trading on 5 June at 832p – a level was just slightly off their 12-month high of 854.5p in the previous week (27 May).

Indeed, Avon Rubber’s share have registered a more-or-less steady climb over the last 12 months to crest around 35-percent above its year-ago level of just 630.5p.

The only blip in this upward trend was a marked but short-lived dip in mid-February, which was followed by a rebound in early March.

Avon Rubber’s shares then kicked on to their current levels, despite a 29 April announcement that CEO Peter Slabbert was stepping down from his position after 15 years in the role.

Slabbert will continue in his current role at the office until 30 September, which is the end of the company’s financial year, an Avon Rubber spokesperson told ERJ. The search for a successor was ongoing, the spokesperson added.

Avon Rubber announced the CEO’s departure alongside a half-year financial results showing a 9-percent increase in earnings (adjusted EBITDA)  at £12.2 million (€17.1 million) on sales of £62.8 million – 2 percent higher than in the prior-year first half.

The gains reflected a strong performance at Avon Rubber’s Dairy unit, which included progress in China and Brazil.

“Dairy delivered a record half year performance as our investment in routes to market and innovative products and services delivered returns,” said Avon Rubber.

The group’s Protection & Defence business, meanwhile, achieved a healthy order intake of £47 million, with £28 million due for delivery in the second half of 2015.

“Avon has enjoyed another positive half year, achieving a 10-percent increase in earnings per share against a very strong comparator period last year that included a 52,000 C50 delivery to a customer in the Middle East,” said Slabbert.

“Trading is normally second-half weighted in our Protection & Defence business and we believe this will continue to be the case this year. We have a strong forward order book in Protection & Defence and believe that the momentum in Dairy will continue.

“The Board therefore expects to make good progress as the year develops and to meet market expectations for the full year.”