Yahoo Finance Gas mask maker Avon Protection plunges 24% on supply chain warning
FTSE 250-listed Avon Protection (AVON.) saw its stock fall 24% on Friday after it warned that supply chain disruption and staffing issues had worsened.
“Notwithstanding the positive demand backdrop, the impact of delays in the receipt of orders, supply chain disruption and a tight US labour market has increased significantly through the second half of the financial year,” the company said in a stock market filing.
The company, which specialises in body armour and gas masks, said the knock-on effects from COVID-19 had forced it to cut revenue guidance for the year to between $245m (£177m) and $260m. The company expects issues to persist into next year.
Avon chief executive Paul McDonald said:"We have made considerable commercial progress over the last 18 months in building a broad portfolio of significant, multi-year contracts across the business, with the underlying demand momentum continuing, so the short-term disruption that we are seeing is unwelcome.
“We remain as confident as ever about the medium-term prospects of Avon Protection, underpinned by a record order book, a growing and visible contract pipeline and world leading businesses and technologies."
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AJ Bell financial analyst Danni Hewson said: "However much it insists these are all short-term factors and the medium-term picture remains positive, the damage from today’s revenue warning from defence and protection kit maker Avon Protection could be lasting."
Hewson said Avon's failure to anticipate the disruptions caused by COVID-19 "damages the credibility of the group’s leadership."
“The knock-on effect from the disruption is significant because it has lots of fixed costs, resulting in a bit of a cash crunch," she said.
Avon Protection specialises in gas masks and other protective equipment for military, fire fighters, and police.
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