REG - Volex PLC - Full Year Trading Update

VolexAnnouncement

18/04/2023 07:00

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RNS Number : 4982W  Volex PLC  18 April 2023

 

Volex plc

 

("Volex", the "Group", or the "Company")

 

Full Year Trading Update

 

Strong organic growth with revenue and profit ahead of expectations

 

Volex (AIM: VLX), the specialist integrated manufacturer of critical power and
data transmission products, today issues an update on trading for the 52 weeks
ended 2 April 2023 (the "Year" or "FY2023").

 

Full year trading ahead of market expectations

 

Volex has continued its positive momentum and demonstrated further progress
during the Year, reflecting its compelling positions in attractive markets
with strong structural growth characteristics.

 

Revenue is now expected to be at least $710 million, representing an increase
of at least 15.5% compared with the prior year. Underlying operating profit is
now expected to be at least $66 million, at least 17.4% higher than the prior
year, with both revenue and underlying operating profit ahead of market
expectations(1, 2).

 

An increase in gross margins and continued cost control improvements is
expected to deliver a strengthening in underlying operating margins to 9.3%
(FY2022: 9.1%). The Group has delivered margins within its targeted range for
three years, managing inflationary cost challenges and demonstrating the
strong competitive positioning.

 

Operating free cash flow in the second half of the Year was substantially
higher than the first half. After capital investment, dividend payments and
acquisition consideration of approximately $46 million in the Year, pre-IFRS
16 net debt is expected to be approximately $76 million. This is a reduction
of $22 million since the half year and represents a covenant leverage of
1.0x(3), comfortably below the Group's target leverage corridor.

 

Continued outperformance of underlying markets provides strong momentum into
FY2024

 

Against a volatile backdrop in FY2023, Volex delivered strong organic growth,
ahead of its underlying markets, which has been driven by continued execution
of the Group's commercial strategy which focuses on:

 

·    Targeting structural growth markets - with the Electric Vehicles,
Complex Industrial Technology and Medical sectors all delivering strong
constant currency organic revenue growth in FY2023. Pleasingly, the adverse
impact of post-pandemic demand normalisation in the Consumer Electricals
sector is being largely offset by market share gains

 

·    Leveraging the Group's global footprint - which is enabling the Group
to benefit from heightened levels of demand in a number of territories as a
result of customers re-configuring supply chains to focus on partners with
high service levels and local facilities

 

·    Expanding the Group's range of capabilities - through targeted
investment the Group has continued to expand its offering which has led to a
high level of new project wins with both new and existing customers

 

Volex is well positioned to continue investing in sustainable organic growth
with a robust balance sheet and healthy cash generation. The Group has an
active acquisition pipeline of value enhancing opportunities, which will
support the achievement of the five-year strategy to grow revenues to $1.2
billion by the end of FY2027.

 

Nat Rothschild, Executive Chairman, said: "I am delighted with the strong
organic growth performance delivered by the business during the period. We
continue to deliver against the long-term, strategic growth plan that we
unveiled last year and I firmly believe that Volex's diverse global footprint,
ongoing investment plans and reputation for excellence will continue to drive
ongoing outperformance versus our competitors. This, combined with our robust
balance sheet and healthy cash generation, means that the Group is well
positioned as we enter the new financial year."

 

-ENDS-

 

 

For further information please contact:

 Volex plc                             +44 (0)7747 488785

 Nat Rothschild, Executive Chairman    investor.relations@volex.com (mailto:investor.relations@volex.com)

 Jon Boaden, Chief Financial Officer

 

 Singer Capital Markets - Nominated Adviser & Joint Broker      +44 (0)20 7496 3000

 Shaun Dobson

 George Tzimas

 

 HSBC Bank plc - Joint Broker  +44 (0)20 7991 8888

 Simon Alexander

 Joe Weaving

 

 Powerscourt - Media Enquiries  +44 (0)20 7250 1446

 James White

 Nicholas Johnson

 

Notes:

1.    Underlying operating profit is before adjusting items which are
one-off in nature and significant (such as restructuring costs, impairment
charges or acquisition-related costs), the amortisation and impairment of
acquired intangible assets and share-based payment charges. This trading
update is based upon unaudited management accounts information.
Forward-looking statements have been made by the Directors in good faith using
information available up until the date that they approved this statement.
Forward-looking statements should be regarded with caution because of the
inherent uncertainties in economic trends and business risks.

 

2.    The Company has compiled forecasts from five analysts with current
market forecasts for the 52 weeks ending 2 April 2023 for revenue to be in the
range of $690.5 million to $695.0 million, with a consensus of $692.9 million,
and for underlying operating profit to be in the range of $62.3 million to
$64.0 million, with a consensus of $62.9 million.

 

3.    Covenant leverage represents the ratio of net debt, excluding
operating lease liabilities, to EBITDA excluding the impact of right of use
amortisation arising on operating lease arrangements. This measure is aligned
with the covenant calculations used for external debt facilities.

 

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