Following the nomination of preferred bidder status in November, Avon Rubber (LON:AVON) has announced that an agreement has been reached with the UK Ministry of Defence (MOD) for the General Service Respirator contract. The contract builds order visibility on both sides of the Atlantic while demonstrating the new strategy in action.
UK contract
Avon was selected by the UK MoD as preferred bidder for the resupply and in-service support of its General Service Respirator on 3 November 2017. The contract announced today is a build to print of the current Scott Safety design over a five-year period. There is a required build-up lead-time, including tooling and approvals, with production starting in H119.The additional investment required for this contract increases group capex guidance to £9m for FY18, up from the prior level of £6m. We have adjusted our forecasts for this increase, with a modest 0.1% reduction in FY18 EPS and 0.4% reduction in FY19 EPS. Overall, the contract should generate c £16m in revenues over the five-year period. This contract does not change revenue or divisional profit guidance.
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