Revenues down but profits up at Avon Rubber

It was good news for Avon Rubber as profit before tax rose for the year ended 30 September, despite a fall in revenues.

Revenue dropped from £117.6m to £107.6m, but pre-tax profits soared from £7.1m to £10.2m, equivalent to 25.2p basic earnings per share (2010: 15.2p), after costs of sale and administration fell.

The full-year dividend per share doubled from 1.5p to 3p, after the firm raised the final dividend by 33% to 2p.

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Revenue in the protection and defence, which account for 72% of the firm's earnings, fell by 14% to £77.4m, as a result of lower Department of Defense orders for fuel and water storage tanks.

Meanwhile, revenues for the dairy sector were up 10% to £30.2m from £27m, which the firm said it remains "well positioned in a market with long term growth potential".

Altium Securities has said that it views both divisions as "holding strong positions in their respective markets" and anticipates strength in earnings growth over the next few years.

Chief executive Peter Slabbert said: "Our strategy of developing both our rapidly growing Protection & Defence business and our high margin and cash generative dairy business has proved successful. Despite an uncertain outlook for global defence spending we expect to make further progress and accordingly have accelerated our investment in new product development."

The share price rose 6% to 318p by 13:30.

NR