Avon Protection shares plunge a quarter as firm slashes guidance
Personal protection maker Avon today saw its shares plummet 25 per cent after it cut its revenue guidance for the next two years.
The FTSE 250 firm said that a combination of supply chain disruption and delayed orders was at fault.
After an hour of trading, shares in the firm were down 25.4 per cent at 2,200.68.
For the year ending in September, the company cut forecasts to $245m-$260m, down from estimates of revenue of $282m.
Next year it said that revenue would come in at $320m-$340m, down from prior analyst forecasts of $357m.
“The impact of delays in the receipt of orders, supply chain disruption and a tight U.S. labour market has increased significantly through the second half of the financial year,” the company said in a trading update.
“The Board is confident that the delayed orders will be received over the coming months, but expects supply chain disruption and a tight US labour market to persist into next year.”
It added that extended lead times for electronic and textile components had delayed the shipment of around $6m worth of orders.
“This update will be a source of frustration for investors, although this is being driven by a host of short-term challenges (not of Avon’s making),” Andy Douglas, an analyst at Jefferies, said.
“The group’s fundamentals are still strong, there are attractive top/bottom-line opportunities, and a balance sheet to play with. However, sentiment will be impacted and confidence in the new guidance will need to be rebuilt.”
Avon Protection specialises in respiratory protection equipment for military, law enforcement and fire personnel.