New tread for former tyre firm

Avon Rubber’s switch to auto and technical products is paying off handsomely

Avon Rubber, which recently shed its core tyres business, now has a strong growth portfolio of niche auto components and technical products.

Stockbrokers enthuse over Avon, with an annual turnover of £250m and a £30m cash pile. One Avon fan, Mark Sevier, of broker Rowan Dartington, reckoned that in its first full year ex-tyres (1997-98), Avon is good for £23m pre-tax profit with strong organic growth topped up by interest from the cash pile.

For the year ending September, he forecasts £19.5m (£21.5m). The figures include the dismal £484,000 from the tyre business before its sale in March to Cooper Tire & Rubber of the US, but not the £11.1m net profit on the deal.

Increasingly, Avon is a global business. Ex-tyres, nearly 80% of sales are overseas and Steve Willcox, chief executive, pleased the City by setting up production in countries where the customers are – in Portugal and India for Ford, and in Mexico for Volkswagen. Avon, already established in seven countries, is now looking at China and Brazil.

Auto components (65% of sales) specialises in engine hosing and mountings and is developing high-tech products, among them the Cadbar impermeable fuel-filler hose.

Some of the Ford range fit it as original equipment and, since production started in Avon’s plant at Cadillac, Michigan, last year, production lines have increased.

In the UK, Avon Vibration Management System is producing at Trowbridge another world first, the Hydromount hydraulics engine mounting, an advance on the traditional rubber and metal product.

Both automotive and technical products, including Hovercraft skirts and gas masks, are set to grow organically. Watchers expect Avon to apply its cash pile to that and add-ons rather than a big acquisition.

Meanwhile the company is busy on Project Atlas – a search for a new 20,000sq ft home for Avon production currently continuing at the Melksham site now owned by Cooper. Avon must be out within three years and has £4m for relocation.