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
Why investors should be “cautiously bullish” for 2020
Stockmarkets

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular

Here’s why you really should own at least some bitcoin
Bitcoin

Here’s why you really should own at least some bitcoin

While bitcoin is having a quiet year – at least in relative terms – its potential to become the default cash system for the internet is undiminished, …
16 Sep 2020
Will a second wave of Covid lead to another stockmarket crash?
Stockmarkets

Will a second wave of Covid lead to another stockmarket crash?

Can we expect to see another lockdown like in March, and what will that mean for your money? John Stepek explains.
18 Sep 2020
James Ferguson: How bad data is driving fear of a second wave of Covid-19
UK Economy

James Ferguson: How bad data is driving fear of a second wave of Covid-19

Merryn and John talk to MoneyWeek regular James Ferguson about the rise in infections in coronavirus and what the data is really telling us.
17 Sep 2020