AGM Trading Update - Continued strategic and operational progress
26 January 2024
After a year of strengthening the business, we are now focused on our objectives of creating a competitive advantage through superior execution, growing faster than our markets by delivering new and improved products to our customers, and increasing margins through our transformation programme.
Avon Protection plc is pleased to announce a trading update for the first quarter of its 2024 financial year ("Q1"), ahead of its Annual General Meeting today.
Trading update
Order intake for the first quarter was 36% higher than the prior year, reflecting strong demand for helmets and rebreathers, following the recently announced contract from the German Navy, partially offset by a modest decline in respirator orders. The order book was 21% higher than the prior year. Year-on-year revenue growth of 27% was in line with our expectations, reflecting the continued successful delivery of NG IHPS helmets to the U.S. DOD and robust demand for pads and commercial helmets.
As expected, cash conversion was very strong reflecting the unwind of the elevated FY23 year-end receivables balance following the high volume of deliveries in the final quarter of FY23.
Following the successful First Article Testing process on the ACH GEN II helmet, work is now ongoing to ramp up production ahead of product deliveries in the second half.
Continued strategic progress
Our focus on operational excellence and continuous improvement is now starting to deliver the expected scrap reduction benefits and recent actions taken in support of functional excellence will start to deliver benefits in H2 2024, in line with expectations.
Our transformation programme is progressing in line with our plan. In December 2023 we informed employees about our plan to close our Irvine, California facility by Summer 2025 as part of our site optimisation programme. Benefits from the consolidation of the California production into our other Head Protection sites will begin in FY26 and will significantly improve competitiveness and financial performance over the medium term.
FY24 outlook unchanged
The trading performance in the first quarter, and the progress made to date on transformation, support our full year expectations of high single-digit revenue growth and solid progression in adjusted operating margin in H2.
Capital markets day
Our capital markets day will highlight Avon's deep technical expertise, supportive addressable markets and strong position to grow above those markets. The Group will also present additional details around its transformation programme, including the roadmap to deliver Avon's margin and return on capital targets.
For further details, and to register to attend the event, please contact avonprotection@mhpgroup.com.
Jos Sclater, Chief Executive Officer, said:
“After a year of strengthening the business, we are now focused on our objectives of creating a competitive advantage through superior execution, growing faster than our markets by delivering new and improved products to our customers, and increasing margins through our transformation programme. While there remain a number of opportunities and risks for us to navigate in the year ahead, I am pleased to see the results start to reflect the strategic and operational progress we are making. We remain focused on the actions required to deliver our medium-term objectives."
Avon will report its half year results for the six months ending 31 March 2024 on 21 May 2024. Prior to this, the Group will host a capital markets day on 8 February 2024.