Avingtrans' 2013 profitability to be hit by sale of Jena Tec

Profitability at Avingtrans will be impacted by the loss of margin resulting from the sale of subsidiary Jena Tec, the company announced in a trading update published on Tuesday morning.

Profitability at Avingtrans will be impacted by the loss of margin resulting from the sale of subsidiary Jena Tec, the company announced in a trading update published on Tuesday morning.

Avingtrans - which manufactures critical components for the global aerospace industry - said that, in the short-term, the margins realised from sales at PFW Farnborough and Aerotech Tubes would not compensate for the loss of margin in respect of Jena Tec.

Sales revenues for this year were expected to be in line with original board expectations, with the loss of revenue replaced by revenue streams from PFW and Aerotech in the second half of the 2013 financial year.

On November 5th the company announced the sale of Jena Tec, its industrial division, for a cash consideration of £13.45m and set out a strategy focused on the Group's two core divisions: Aerospace and Energy & Medical.

In line with this strategy, the company subsequently announced the acquisitions of certain assets of PFW Farnborough for £1.85m and Aerotech Tubes for £2m.

The group will realise an exceptional profit in respect of the disposal of Jena Tec of approximately £8m and will incur exceptional costs of £0.35m linked to the acquisitions of PFW and Aerotech.

The company's trading update stated that the sale of Jena Tec, and the subsequent acquisitions described above, had provided Avingtrans with a more focused business and a stronger balance sheet which would enable it to invest in each of the businesses and pursue opportunities which it would otherwise have been unable to target.

Group cautiously optimistic about 2014 financial year

The group is confident that it will see both revenue and margin improvement during the 2014 financial year, which will deliver results marginally above previous board expectations. Coupled with an improved and more robust balance sheet, the Board believes that the recent transformational transactions place the Group in a much stronger position for the future, both financially and strategically.

Interim dividend to be reinstated

The board expects to reinstate an interim dividend of 0.7p when the company announces its results for the six months ended November 30th 2012.

The group's share price jumped sharply in November from 88p to 102p following a period of relatively flat trading through much of August, September and October.

Avingtrans' share price was down 7.28% to 95.50p at 10:06 on Tuesday morning.

MF

Recommended

Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020

Most Popular

Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021
Inflation is the easiest way out of this – just don’t expect politicians to admit it
Inflation

Inflation is the easiest way out of this – just don’t expect politicians to admit it

The UK government borrowed £34.1bn in December, a record amount for that month. Britain's debt pile now amounts to 100% of GDP. How are we going to pa…
22 Jan 2021
When will the US stockmarket bubble burst?
US stockmarkets

When will the US stockmarket bubble burst?

With US stocks more expensive than before the Wall Street crash of 1929, there are growing signs of “mania”. But what will push markets over the edge?
22 Jan 2021