Avon Technologies (LSE:AVON) said on Wednesday that results for the year ended 30 September will come in ahead of current market expectations, with revenue growth of approximately 12.5%, against 13.8% in the prior year.
The London-listed maker of military and law-enforcement protective equipment said adjusted operating profit margin, including the effect of some beneficial one-off items in the year, will land comfortably above its guided 14-16% range, up from 12.8% in FY25.
Return on invested capital will be significantly above the company's guidance of greater than 17%, having stood at 18.6% in FY25, the company said.
Year-end net debt, excluding lease liabilities, is expected to be approximately $34m, representing full-year cash conversion above 85% and leverage below 0.5 times.
The order book has risen significantly since the half-year results, Avon said, with Avon Protection seeing healthy demand through the NATO Support and Procurement Agency (NSPA) programme and several new European orders, while Team Wendy's order book grew materially in the second half on the back of the largest share of the recent Next Generation Integrated Head Protection System (NG IHPS) order, strong Advanced Combat Helmet (ACH Gen II) volumes, new US Air Force orders and renewal of the Australian Defence Force programme.
Team Wendy production has stabilised at target levels, the company said, contributing to a significant improvement in operating margin during the second half, while Avon Protection continued to trade well on sustained commercial demand in North America.
Alongside the trading update, Avon used an investor strategy teach-in in London to set out its next phase, titled "Improve. Grow. Compound.", targeting annual revenue growth above 5% on a compound basis, adjusted operating margins of 16-18%, annual EPS growth above 10% and free cash flow of over $175m over the next three years, building toward five-year group targets of revenue above $600m while maintaining ROIC above 18%.
"The next phase of our strategy is: Improve. Grow. Compound," Chief Executive Officer Jos Sclater said, adding that the group sees an opportunity to "compound shareholder value over the long term" through selective acquisitions in protection technology.