Avon Technologies reports solid set of preliminary results
By Josh White
Date: Tuesday 19 Nov 2024
(Sharecast News) - Avon Technologies reported a robust set of preliminary results on Tuesday, with received orders surging 40.9% year-on-year to $364.4m, driving a record closing order book of $225.2m, up 65.8%, and providing strong visibility into the 2025 financial year and beyond.
The London-listed firm said its revenue grew 12.8% in the 12 months ended 30 September to $275m, while adjusted operating profit jumped 49.1% to $31.6m, supported by operational improvements and cost efficiencies.
It achieved an 80.7% increase in adjusted profit before tax to $25.3m, while adjusted basic earnings per share rose 73.4% to 69.9 cents.
Net debt, excluding lease liabilities, narrowed by 32.6% to $43.5m, bringing leverage below 1x and highlighting Avon's strengthened financial position.
Statutory operating profit reached $10.7m, swinging from a $12.6m loss in the 2023 financial year.
Operationally, Avon's 'Continuous Improvement' (CI) initiatives drove productivity gains, with a 21% improvement in efficiency, a 54% reduction in scrap rates, and an increase in inventory turnover to 3.1x from 2.9x in 2023.
Those enhancements were contributing to transformation efforts, including the consolidation of helmet manufacturing sites, which remained on track.
Avon said it secured several significant defence contracts during the year, bolstering its order pipeline.
Notable wins included a $38m UK Ministry of Defence respirator and filter contract, $34m in orders for the US Department of Defense's Advanced Combat Helmet GEN II, and $42m in delivery orders for the US Army's Next Generation Integrated Head Protection System.
Additional contracts with the Australian Defence Force, the New Zealand Navy, and the German Navy further diversified the company's customer base.
Looking ahead, Avon said it expected continued growth in the 2025 financial year as it implemented manufacturing optimisation programmes.
Medium-term targets for operating margin and return on invested capital (ROIC) were now anticipated to be met by 2026, one year ahead of schedule, reflecting the faster pace of transformation.
Although the total dividend per share for 2024 was reduced to 23.3 cents from 29.6 cents in 2023, the company highlighted its confidence in delivering sustained growth and improved returns over the long term, supported by a record order book and ongoing operational improvements.
"It is now 18 months since we launched the STAR strategy and we are making good progress," said chief executive officer Jos Sclater.
"This is demonstrated by our much stronger financial performance, improving operating metrics and a fast-growing order book.
"I am however most excited by the ability of the organisation to change and translate strategy into action."
Sclater said the company had built a culture where improving processes was "becoming the Avon way of life", adding that the company had "much more capable people", with the pace of change accelerating.
"As a result of the progress made during the year, we see the potential to reach our medium-term operating margin and ROIC guidance target ranges a year early, in 2026.
"We also expect the transformation programme to be largely complete by then, with an accompanying significant decrease in transformation cash costs providing the platform for a broader capital allocation strategy."
At 0942 GMT, shares in Avon Technologies were up 8.86% at 1,426.11p.
Reporting by Josh White for Sharecast.com.
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