Avon Protection PLC (LON: AVON) share price crashed 43.6% after warning investors that revenues from its body armour division would be drastically reduced after one of its products failed a crucial test.
The company which manufactures protective helmets and gas masks for law enforcement agencies and firefighters reported that its Vital Torso Protection (VTP) ESAPI body armour plates used by the US Army had failed a crucial test standard.
Furthermore, Avon Protection noted that its separate DLA ESAPI body armour plates were also experiencing delays in obtaining the final approvals for the product, with current projections indicating potential approvals in the quarter ending 30 September 2022.
The protection equipment manufacturer also revealed that its 2022 full-year financial results would be adversely affected given that it had initially estimated revenues worth $40 million from its body armour division.
In Addition, Avon Protection also postponed the release of its full-year 2021 financial results that were due on 23 November 2021 to a later date,
The postponement is meant “to allow for a review of the carrying value of the assets related to the body armour business and the additional audit work arising from this post balance sheet event.”
Avon Protection also revealed that it had commenced a strategic review of its body armour business, which left investors wondering whether the company might decide to exit the business given the significant delays encountered in getting approvals for its products.
The company reassured investors that its helmet products division and respiratory protection business remained stable as they were unaffected by the body armour division’s operations.
Today’s price crash has left Avon shares trading at lows, last seen in early 2019, trading at an area with significant support. I wouldn’t be surprised to see Avon shares bounce off these levels in the future.
*This is not investment advice. Always do your due diligence before making investment decisions.
Avon Protection share price.
Avon Protection share price plunged 43.57% to trade at 1075.0p, falling from Thursday’s closing price of 1905.0p.
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