Avon Rubber stretches dividend after year of change

Avon Rubber PLC (LON:AVON) bumped up its dividend 30% after sales and underlying profits increased in a transformational year.

As well as selling off its dairy farming equipment business for GBP180mln, the group acquired 3M’s ballistic helmets and armour business for up to US$116mln (GBP87mln) in January and, post-year-end, has added further helmets strength with the purchase of Team Wendy for US$130mln.

Able to continue operations with only minor disruption throughout the year to end-September, despite the coronavirus pandemic, the group reported revenues of GBP168mln, up 30.8% on the previous year thanks to currency swings but flat if forex is excluded. Orders received of GBP160.8mln were up 4.5% during the year.

Adjusted profit before tax for the year of GBP28.2mln rose 27% or 8.8% on a constant currency basis.

With net cash of GBP93.2mln at year-end, up from GBP35.4mln a year ago, the board said it was happy to declare a final dividend per share of 18.06p, up 30.0%, resulting in a full-year total dividend of 27.08p, also up 30.0%.

On the outlook, the company said this is underpinned in the medium-term by multi-year military contracts across its business portfolio, with an opening order book of GBP79.8mln providing confidence for 2021.

Management said they aim to make further acquisitions over the medium-term.

Broker Peel Hunt said the results were “bang in line with expectations”.

Avon shares, having more than doubled since the start of 2020, fell 7% to 4,285p in early trading.