Avon Rubber slumps amid delays to US Army body armour contract

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Avon Rubber PLC (LON:AVON) shares were lower on Thursday after the protection equipment maker said a contract to make body armour plates for the US Army and the Defense Logistics Agency (DLA) has been hit by delays.


In an update, the FTSE 250 firm said the product approval process for the armour plates, which had been expected to conclude in the first half of next year, has been delayed due to a failure in first article testing, and as a result first deliveries under the contracts are now expected to begin in the first half of 2022.


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Avon also said a protest has been made against the US Army’s next generation integrated head protection system sole source contract announced on September 24, which has also caused a delay although is not expected to have a material impact on group expectations for the 2021 financial year.


The company also issued a general trading update, saying that following its full year results on December 2 trading has “continued as expected” in the first quarter with good order intake across its portfolio.


“We are working collaboratively with our customers to resolve the delays to product approval for the [DLA and Army] contracts as quickly as possible. These contracts remain an important part of the ballistic protection portfolio and will be a significant contributor to the group over the medium term”, Avon chief executive Paul McDonald said in a statement.


“The business continues to perform strongly, and our 2021 financial year will see further significant progress as a result of continued growth as well as the contribution from the recent Team Wendy acquisition. We remain very confident in the Group’s medium-term prospects which are built on a strong, growing and visible contract pipeline, together with a clear strategy”, he added.


NATO order


In a separate announcement, Avon unveiled a US$33mln order under a contract with NATO’s support & procurement agency.


Under the orders, Avon said its protection business will supply Norway, Finland and Belgium with its respiratory protection equipment including FM50 mask systems, filters, spare parts and accessories.


Deliveries are expected to begin in the current financial year and will contribute to the company’s rest of world military revenues for the year.


Avon shares fell 14% to 3,215p in mid-morning trading.

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