U.S. Army Supplier Loses Half Its Value on Body-Armor Woes
(Bloomberg) -- Avon Protection Plc plummeted after the British defense supplier warned of testing failures for some body-armor plates ordered by the U.S. military.
The Wiltshire, England-based company’s stock slumped as much as 51%, the most on records going back to 1989, as it warned of a hit to revenue and started a strategic review of its body-armor unit. The update comes less than two months after the firm extended a pact with the U.S. Defense Logistics Agency to supply protectors for the torso and arms.
Avon went public in London in 1949 after supplying 20 million gas masks for British armed forces during World War II, according to its website. In 2019, it bought 3M Co.’s ballistics protection unit for $91 million, which included helmets and body armor.
Body armor is a relatively small part of the business, with the respiratory unit -- which includes gas masks -- accounting for about three-quarters of revenue, the firm’s annual report shows. In August, Avon predicted 2022 sales of $320 million to $340 million, while warning of shipping delays in an update that also hit the stock. That guidance had included about $40 million of body armor sales, it said Friday.
“It is important to recognize that the higher margin/higher quality respiratory protection and helmet product portfolios are not impacted by this update,” Jefferies analyst Andy Douglas wrote in a note to clients. Still, the news is “clearly disappointing,” he added.
Avon was down 51% to 940 pence as of 3:40 p.m. in London, giving the group a market capitalization of 292 million pounds ($391 million).
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