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Summary
- Avon Rubber PLC notifies delay in the first deliveries under its ballistics protection contracts with the US Army
- A failure in the First Article Testing has delayed the approval processes
Avon Rubber PLC (LON: AVON), the manufacturer of military and defence equipment, has warned of a delay in deliveries following the slow approval processes after the First Article Testing failed.
Avon was awarded contracts for the US Defence Logistics Agency's small arms protective inserts and US Army's vital torso protection body-armour plates. The group was in talks with two US government customers to finalise the product approval processes, which was to be delivered in the first half of 2021. But due to the failed first article testing, the process was delayed. Avon now hopes to deliver by the first of 2022 financial year.
The contracts are DLA ESAPI (US Defence Logistics Agency Enhanced Small Arms Protective Inserts) and VTP (US Army Vital Torso Protection) body armor plates.
The US Army Next Generation Integrated Head Protection System sole source contract was announced on 24 September and had been facing protests since then. However, this recent development is not expected to have any material impact on Group expectations for FY21.
Interesting Read: Does recent restructuring activities lift the financial performance of Avon Rubber?
Operational Highlights
- Avon Rubber stated that the company had received its first orders under the NATO Support & Procurement Agency contract, which is worth $33 million.
- Avon Protection would supply its respiratory protection gear, including FM50 mask systems, filters, spare parts and accessories to Belgium, Finland and Norway under these contracts. The current financial year will witness the progress in making deliveries under these orders, and it will contribute to its expected rest of world military revenues for the year.
- The US Department of Defence has also ordered the M53A1 mask and powered air system. The company expects to receive more orders from US DOD in H1 FY21.
- Avon disclosed that Team Wendy had been performing well in line with the company’s expectations in the first month of ownership. It has received more orders, including follow-on ballistic helmet orders from the Australian Defence Force.
- The company has seen strong Covid-19 related demand for its respiratory protection range within its First Responder business. Encouraging progress has also taken place in pipeline building and order intake for the Ceradyne ballistic helmet range following its launch in North America in July this year.
- Avon’s portfolio of life critical PPEs for the militaries across the world and first responders have also seen a good response and orders.
Stock Performance
AVON’s stock price plummeted by 11.90 per cent from its last day’s trading close after it announced the delay in the US project, ending the session at GBX 3,295.00 on 1 December 2020.
