Avon Tech interims lift shares to 3yr high but analysts see 'plenty of heavy lifting still to do'

Shares in Avon Technologies PLC (LSE:AVON) headed towards their highest in over three and a half years as the maker of helmets and breathing apparatus reported first-half results ahead of forecasts. 

The London-listed group posted interim numbers showing adjusted pre-tax profits up 70% to $14.8 million and reported operating profits more than doubled to $6.2 million, on revenue up 17% to $148.7 million. 

Management estimated a gross impact of tariffs on deliveries from the UK to the US at $800,000 at a 10% tariff rate, but it could be higher in the event of reciprocal tariffs.

Its order book stood at $247 million at the March half-year period, with a 69% increase in order book in Avon Protection, including four NATO nations funding orders to be sent to Ukraine, three new NATO respirator customers and a long-term contract renewal with Thales for a critical UK defence programme.

There was a $10 million increase in the order book in the Team Wendy helmets division, including orders of $74 million of Next Generation Integrated Head Protection System from the US Army, and $59 million of US Departmwnt of Defense orders for its new Advanced Combat Helmet.

Avon said it expects to deliver double-digit revenue growth in the current year to September, with improved returns in the second half as it generates further benefits from operational improvement programmes.

It is "on" track to deliver target adjusted operating margin within a 14-16% range in the 2026 financial year, with "strong progress made on our operational goals, expect to reach our medium-term financial targets a year early", with no hindrance from US tariffs or the DOGE cuts. 

Analysts at Jefferies said the statement "reads very well", both with regard the current year and "arguably more importantly with regard to FY26F and the medium term".

The firmer margin target for FY26 "is testament to the operational improvements coming through, although we recognise management's comments that there is still plenty of heavy lifting to do".

Broker Shore Capital said Avon's shares trade on a 2026 EV/EBIT ratio of 12x, a meaningful discount to peers at circa 19x.

"Strong execution, continued growth, and early delivery of targets suggest upside potential. However, soft order flow tempers the upside, and so we expect shares to trade in line with the market near term."

House broker Peel Hunt said its 2025 revenue forecast of $310 million implies group growth of 9% in the second half after 17% in the first.

Following the new disclosure on tariffs, Peel said: "Avon has a strong competitive position, can build tariff costs into pricing, and has more immediate flexibility than some of its competitors to relocate production over time to more favourable jurisdictions."