Bullet proof vest firm is up 40-FOLD
WHEN Midas first recommended Avon Rubber, in 2010, the shares were £1.02 and the company was in recovery mode. Today, the stock is £41.05, making it one of the best performing shares in the stock market over the past decade.
Dividends have soared as well. In 2010, they were 1.5p. Last week, the group revealed a 30 per cent rise in the 2020 payout to 27.08p.
The figures bear witness to a real British success story. From humble beginnings as a tyre maker in Victorian England, Avon has become a world leader in protection equipment for soldiers, special forces, the police and other front line emergency workers.
Based in Melksham, Wiltshire, the group makes top-of-the-range masks and air tanks that can filter out 99.97 per cent of impurities in the air and allow users to breathe freely from tanks that monitor and regulate oxygen levels second-bysecond depending on heart rate, exertion and location.
The masks are used to protect wearers on military manoeuvres, counter-terrorism operations and underwater mine work. Police use them in drug raids and recently to ensure they are protected from Covid-19 when entering unknown buildings.
Avon has another division, which makes helmets and the plates for bullet proof vests. These are so resilient that they can withstand rifle shots at near point black range and protect the soldiers wearing them.
Equipment such as this makes Avon a leader in its field and customers include the US Department of Defence, Nato, the MoD and the Metropolitan Police.
Around a quarter of the group’s 1,000 employees are in the UK – most of the rest are in America, where there are a further five manufacturing sites.
Chief executive Paul McDonald has been with Avon since 2003 and took the top job three years ago. Since then, the group has increased revenues organically and more recently, by acquisition, completing two deals this year, one just last month.
In July, McDonald also sold Avon’s dairy division for £180 million. The business makes a range of milking products and it was performing well but McDonald wanted to focus Avon on protective equipment. The move has met with widespread investor approval.
Looking ahead, McDonald intends t o pursue a blend of organic growth, selected acquisitions and constant investment in research and development.
The group already makes kit that is lighter, more effective and easier to wear than most of its peers. McDonald is determined to retain that competitive edge. Sales to September rose 31 per cent to £168 million while profits adjusted for all those deals rose 27 per cent to £28.2 million.
Further strong growth is expected in 2021 and Avon recently secured a five-year contract with the US Army and a ten-year contract with Nato so the longer-term outlook is promising.