Defence firm Avon Protection (AVON) ticked up 1% to £10.58 as it gave an in-line update on trading and unveiled plans to buy back £18.5 million of its own shares.
However, the company, which specialises in respiratory equipment, including gas masks, head protection and body armour, said it expected revenue to be weighted toward the second half of 2022 amid continued longer order lead times.
Shareholders could be forgiven for feeling wary about the need for a stronger second half to meet guidance after a bruising period which has seen the shares lose three quarters of their value since November 2020.
UNCOMFORTABLE ECHOES
In hindsight the warning signs for a string of profit warnings were there when it became clear that in order to meet 2021 expectations, the company would have to make up a first-half shortfall in the second half of the year - something which has some uncomfortable echoes in today’s statement.
Most of its problems have related to the body armour business which is now set to be gradually wound down and closed in 2023.
‘The board does not intend to initiate any major merger and acquisition activity in 2022 and given the strong financial position and expected cash generation, the purpose of this buy-back is to maximise the efficiency of the balance sheet for shareholders’ benefit,’ the company said.
Supply chain disruptions, as communicated last year, continued but were now ‘largely stable, with mitigating actions continuing to be taken,’ the company said.
‘The board therefore remains confident of achieving its expectations for the current financial year.’
