Engineering firm Avingtrans grows interim revenues to £50m despite supply chain issues

Engineering business Avingtrans has seen its half-year turnover reach £50million despite supply chain disruptions, compared to £44.5million for the same period the year before.

Sales rose by £5.5million for the six months ending November 2022 as all three of the group’s core divisions achieved growth thanks to higher original equipment manufacturing sales, especially in its engineered pumps and motors arm.

Gross margins were impacted by the increased mix of OEM sales, resulting in profits declining by £350,000 to £2.5million, but the AIM-listed firm declared a slightly larger dividend of 1.7 pence per share. 

The company’s order book also continued to strengthen, reaching over 90 per cent cover for the financial year ending May 2023 and 55 per cent for the following 12 months.

Among the deals won during the reported period was a $1.1million contract extension by Avingtrans subsidiary Hayward Tyler to develop molten salt pumps for the US Department of Energy’s Advanced Reactor Demonstration Program.

This followed a multi-million-pound contract in March with a separate Avingtrans subsidiary, Energy Steel, to support the ITER project in France, which aims to produce energy from nuclear fusion.

Yet the group admitted that this division was one of many to suffer from supply chain problems primarily caused by Russia’s invasion of Ukraine and the relaxation of Covid-19 restrictions. 

Avingtrans noted that logistics issues continued to be its ‘biggest uncertainty,’ although it believes ‘peak disruption’ may have been passed.

Chairman Roger McDowell said: ‘Whilst the board remains vigilant in the current environment, we are confident about the current direction and potential future opportunities across our markets.

‘Strong order intake and timing of contract revenue recognition has provided management with good visibility over H2 2023 revenue and profits, ongoing supply chain disruptions notwithstanding.’

Based in Cambridgeshire, Avingtrans designs products such as compressors, cross passage doors, packaged water heaters and helium containment pressure vessels.

Its main focus is in the nuclear industry, where it observes orders growing amid a renewed focus on energy security, particularly in the United States, home to the world’s largest civil nuclear fleet.

In Britain, the company’s Metalcraft business currently has a decade-long deal to manufacture stainless steel waste storage boxes for the decommissioned Sellafield power plant in Cumbria. 

Avingtrans also has a foot in the UK oil and gas sector, where it is gaining more work as fossil fuel prices remain elevated by the easing of pandemic restrictions and the Ukraine war.

Avingtrans shares closed 2.65 per cent lower at 377.2p on Wednesday, yet their value has still grown by approximately 73 per cent in the past five years.