Avon produces surprise

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AVON Rubber surprised the City with a 36 per cent rise in full-year pre-tax profits before exceptionals to pounds 9.1m, writes David Bowen. Analysts had expected pounds 8.5m.

The shares were marked up 25p to 435p. Earnings per share were up from 19.9p to 27.9p and the dividend is unchanged at 16.5p.

Last year's earnings were affected by the cost of closing a factory, which reduced taxable profit after exceptionals to pounds 965,000. There are no such costs this year.

The star performer was the US car parts company Cadillac Rubber, whose profits rose from pounds 1.8m to pounds 4.1m. Cadillac was bought in 1989, since when Avon has been struggling to cut costs and increase sales. Rationalisation also showed through in the inflatable boat division, which moved from a pounds 1.8m loss to a pounds 25,000 profit.

The technical products division slipped from pounds 7.9m to pounds 4.6m. However the company says the high profile its defence products gained during the Gulf war helped win substantial export orders.