REG - Volex PLC - Full Year Trading Update

VolexAnnouncement

18/04/2024 07:00

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RNS Number : 0447L  Volex PLC  18 April 2024

 

18 April 2024

 

Volex plc

 

("Volex" or the "Group")

Full Year Trading Update

Further diversification and strong growth

Volex (AIM: VLX), the specialist integrated manufacturer of critical power and
data transmission products, today releases a trading update for the financial
year ended 31 March 2024.

Full year performance ahead of market expectations

Revenue is now expected to be at least $900 million, representing an increase
of at least 25% over the prior year, including seven months contribution from
the acquisition of Murat Ticaret, while underlying operating profit(1) is also
now anticipated to be slightly ahead of analyst expectations(2).

This performance underscores Volex's ability to secure additional customer
commitments and deliver new projects, whilst maintaining robust financial and
operational discipline.

Operating profit margins improved in the second half of the year. This was
partly a result of product mix, including the contribution of Off-Highway
sales, offset by accelerating investment in future strategic growth
initiatives to support increased, long-term customer demand.

Strong organic growth driven by attractive positions in diversified
end-markets

The second half of the year saw continuing increases in organic revenue, a
result of leading positions in attractive, diversified end-markets that
possess structural growth characteristics. Exposure to a number of growth
sectors, provides the Board with confidence in the Group's ability to make
strategic progress even in volatile market conditions. The acquisition of
Murat Ticaret also delivered significant incremental revenue, in a largely new
end-market.

The Medical and Complex Industrial Technology sectors delivered extremely
strong growth, partly due to pent-up demand arising from previous global
supply chain challenges, as well as increased sales of high-speed data centre
cables. Off-Highway operations achieved high growth in addition to the
incremental contribution from the acquisition of Murat Ticaret.

Performance in both Electric Vehicles and Consumer Electricals improved in the
second half of the year. Although revenues in these sectors remain below
FY2023 levels, a reduction in the amount of customer destocking experienced in
the second half creates confidence in the potential for a return to growth in
the forthcoming financial year.

Continuing to invest in profitable growth opportunities

The Group's presence in attractive markets and its well-invested global
manufacturing base offer significant growth opportunities. Strategic
investment initiatives continued throughout the year to support customer
requirements and will continue during FY2025.

In response to increasing customer demand, the Group invested in the further
expansion of its global manufacturing base, creating additional capacity to
facilitate growth as part of the Group's five-year growth plans which target
revenues of $1.2 billion by the end of FY2027.

The integration of Murat Ticaret is progressing according to plan, with
continuing positive engagement from customers and staff alike. The integration
activities will accelerate in FY2025, including stepping up the investment
programme in North America to replicate the success of the Off-Highway
operations in Europe.

The cash generative nature of the business provides the Group with flexibility
over internal growth investment and M&A activity. Cash flow was very
strong in the second half of the year, with covenant leverage at the year end
expected to be approximately 1.1x.

Nat Rothschild, Executive Chairman, said: "Our ability to continue to deliver
strong growth in challenging markets is a testament to the quality of the
team, our strategy and our ability to respond to the needs of our customers.
We enter the new financial year with confidence and optimism thanks to the
strong momentum generated in the current financial year, improving market
conditions in the Electric Vehicles and Consumer Electricals sectors, as well
as an abundance of opportunities in the new Off-Highway sector. Our continued,
strategic investment initiatives will support increased customer demand as we
continue to make strong progress towards the delivery of our five-year plan."

 

For further information please contact:

 Volex plc                                           +44 (0)7747 488 785
 Nat Rothschild, Executive Chairman
 Jon Boaden, Chief Financial Officer

 Peel Hunt LLP (Nominated Adviser and Joint Broker)  +44 (0)20 7418 8900
 Ed Allsopp / Ben Harrington

 HSBC Bank plc (Joint Broker)                        +44 (0)20 7991 8888
 Simon Alexander / Joe Weaving

 Powerscourt                                         +44 (0)20 7250 1446
 James White / Nicholas Johnson

 

 

About Volex plc

Volex plc (AIM:VLX) is a driving force in integrated manufacturing for
mission-critical applications and a global leader in power and data
connectivity solutions. Our diverse operations support international blue-chip
customers in five key sectors: Electric Vehicles, Consumer Electricals,
Medical, Complex Industrial Technology and Off-Highway. Headquartered in the
UK, we orchestrate operations across 28 advanced manufacturing facilities,
uniting over 12,000 dynamic individuals from 24 different nations. Our
extraordinary products find their way to market through our localised sales
teams and authorised distributor partners, supporting Original Equipment
Manufacturers and Electronic Manufacturing Services companies across the
globe. In a world that grows more digitally complex by the day, customers
trust us to deliver power and connectivity that drives everything from
household essentials to life-saving medical equipment. Learn more at
www.volex.com (http://www.volex.com) .

 

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 ended 31 March 2024 for revenue to be in the range
of $849.8 million to $873.0 million, with a consensus of $859.5 million, and
for underlying operating profit to be in the range of $83.3 million to $84.6
million, with a consensus of $84.2 million.

 

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