Defence and protection kit maker Avon Protection (AVON) had a torrid time after it warned on revenue slumping 24.7% to £22.24.
The shares have now more than halved since an earlier warning in December 2020. The impact on performance has come as a result of order delays, supply chain issues and a tight labour market in the US.
The net result is that revenue guidance for the 12 months to 30 September 2021 is reduced to a range between $242 million and $260 million - the consensus estimate was for $277 million.
While the forecast for the September 2022 financial year $320 million to $340 million (consensus $354.9 million), guidance for 2023 is unchanged for now.
This has the knock on effect of depressing margins to 17% to 18% and seeing cash conversion dip to around 50%.
SOME BRIGHTER NEWS
All this overshadowed news that order intake in the 10 months to 31 July 2021 rising 13% to $221 million year-on-year, lifting the order book value to $146 million, up 21% year-on-year.
AJ Bell financial analyst Danni Hewson commented: ‘The specialist in body armour, gas masks and other breathing apparatus is being hit by a damaging combination of supply issues and order delays, which it attributes to the impact of Covid-19.
‘While these may be legitimate excuses, this certainly isn’t a case of the dog ate my homework, others in its peer group seem to have been able to mitigate these impacts more effectively and the pandemic isn’t something new, these problems could and probably should have been seen coming earlier.
‘Avon’s failure to do so damages the credibility of the group’s leadership and the knock-on effect from the disruption is significant because it has lots of fixed costs, resulting in a bit of a cash crunch.’
