Avon Rubber, the gas masks and dairy products company, has dropped sharply this morning after reporting a legal challenge over an order from the US Department of Defence.
The losing bidder in a tender for gas masks (more precisely, "filters") is challenging the award of the contract and Avon expects this to delay deliveries. The contract is a big deal for the company, worth $176m, with an initial $2.5m for immediate delivery, so the time lag is a problem.
Avon says that the pipeline of sales opportunities remains strong outside of its Department of Defence markets, but the economic climate is making it difficult to predict exactly when customers will sign on the dotted line.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The Dairy division, which makes products for use in milking livestock, is seeing "strong market conditions prevail", particularly in North America.
Net debt at the end of the year was down to £7m from £11.8m in September.
The outlook statement warns that filter deliveries (gas masks) will be weighted to the second half of this year, with an obvious impact on earnings.
The stock had droppped 6.4% by 11:45am in London.
BS
-
8 of the best houses for sale with annexesThe best houses with annexes – from a period property in the Lake District to a 13th-century house with a two-bedroom annexe in Saltwood, Kent
-
Zelenskyy moves to appease Donald Trump – what happens now?Ukraine’s president Volodymyr Zelenskyy is conceding ground to secure the least-worst deal possible, says Emily Hohler
