Margins and profits improve at Avon Rubber

4th May 2011 13:31

High tech rubber products provider Avon Rubber saw margins and profits improve at the interim stage, even as revenues declined as a result of US defence spending delays. The group's revenues fell 15% to £48m in the six months to 31 March from £56.5m the year before, but earnings before interest, tax, depreciation and amortisation (EBITDA) actually improved, to £7.1m, from £6.2m previously, while profit before tax jumped to £4.4m from £2.9m.The deterioration in revenues was due solely to delays in the approval of the US's Department of Defence (DoD) budget. If not for that delay then revenues would have broadly remained constant if all deliveries for which they have inventory and orders had been shipped.With the US defence budget now having been approved, the company is looking forward to stronger revenues in the second half of its financial year, and also expects to maintain the underlying profit momentum seen in the first half of the year.Offsetting the impact of the DoD delays, the Protection & Defence business benefited from increased non DoD orders.The profitability of the Dairy business improved significantly year on year, reflecting better market conditions and the effects of Avon's European production outsourcing project.Cash from operating activities also fell , to £0.57m, from £2.87m a year ago. Net debt at the end of March stood at £13.9m, compared to £14.4m at the end of March 2010.The company, which only resumed paying dividends at the end of the last financial year, has proposed an interim dividend of 1.0p.The company's chairman, the Right Honourable Sir Richard Needham, has announced his intention to give up the role at the next annual general meeting of the company, though he will remain on the board to enable a smooth transition to his successor, David Evans, currently a non-executive director of Avon.ab