Avon Rubber


£531.7m market cap

1714p last close

Avon Rubber designs, develops and manufactures products in the protection (70% FY18 sales) and dairy (30%) sectors. Its major contracts are with national security organisations such as the US DoD. Over 70% of 2018 sales were from the US.

Investment summary

Avon is delivering on its growth strategy focused on growing the core, adding selective product development and making value-enhancing M&A. The proposed purchase of 3M’s ballistic protection assets should boost EPS by c 20% in a full year when it completes in H120. The positive pre-close statement led us to upgrade FY19 sales modestly with EPS boosted by a tax release. The 2019 mask orders are accelerating Avon Protection’s organic growth, building momentum into FY20, as does improved trading in milkrite | InterPuls in H219.

Y/E Sep
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 159.2 36.3 25.9 83.3 20.6 17.5
2018A 165.5 35.3 27.2 76.5 22.4 15.7
2019E 178.6 39.5 30.5 88.4 19.4 25.0
2020E 189.5 43.1 33.5 88.2 19.4 10.2
Last updated on 21/10/2019
Industry outlook

Avon’s long-standing, multi-level relationship with the US DoD is important to the group and the end market backdrop is supportive. The active dialogue for the M50 replenishment phase should extend the programme for at least another 15 years, plus a focus on higher price sophisticated mask systems provides a further opportunity. Meanwhile, growth has been encouraging in Farm Services, building greater visibility into the business. We maintain our view that Avon has the market position, product portfolio and strategic ambition to further accelerate its growth through organic and inorganic means.

Last updated on 21/10/2019
Share price graph
Balance sheet
Forecast net cash (£m) 49.1
Forecast gearing ratio (%) N/A
Price performance
Actual (3.2) 34.5 38.2
Relative* (1.3) 39.1 34.9
52-week high/low 1816.0p/1180.0p
*% relative to local index
Key management
David Evans Chairman
Paul McDonald CEO
Nick Keveth CFO

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