REG - Volex PLC - Trading Update

VolexAnnouncement

20/04/2022 07:00

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RNS Number : 6645I  Volex PLC  20 April 2022

20 April 2022

Volex plc

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

Trading update

Volex plc (AIM:VLX), the global supplier of integrated manufacturing services
and power products, provides the following update on trading ahead of the
announcement of the Group's full year results for the 52 weeks ended 3 April
2022 ("the year").

 

Results ahead of expectations

 

Volex is pleased to confirm that the Group's revenues and underlying operating
profits are expected to be ahead of consensus market expectations(1) for the
year.

 

The Group expects, subject to finalisation of the accounts and audit, revenues
to be in excess of $605 million (FY2021: $443 million) and underlying
operating profit(2) to be in excess of $55.0 million (FY2021: $42.9 million).

 

Strong customer demand and organic revenue growth

 

Volex has continued to trade strongly, delivering robust organic revenue
growth, including a significant contribution from the Electric Vehicles
sector, where revenue has almost doubled. Demand has increased during the year
with greater visibility of forward orders as customers look to secure
manufacturing capacity.

 

Responding to supply chain challenges and disruption

 

The Group is managing global supply chain challenges effectively, responding
dynamically to meet customer expectations. Working capital has increased due
to the growth in sales, as well as investment in higher levels of inventory to
maintain our position as a reliable partner to customers in an environment
with extended supplier lead times and delays with global freight.

 

The Group is well positioned to navigate the challenges of a dynamic
macro-environment, underpinned by its diverse markets, capabilities and global
manufacturing footprint. These strengths have been central to the continued
strong progress made by the Group, despite the challenges posed by Covid-19,
the on-going disruption to supply chains globally and, more recently, the
Russian invasion of Ukraine(3).

 

Managing inflationary cost pressure

 

In a global inflationary environment, our ability to pass through increased
costs to customers, protecting profitability while maintaining
competitiveness, has been important.  Our global teams have deep
relationships with customers, enabling efficient and regular mechanisms to
modify costs as required.

 

Investing in growth

 

As planned, during the year we have made strategic, targeted investment in
production facilities, equipment, IT and people to support our long-term
growth objectives. The strategic diversification achieved in recent years has
positioned the Group well, with capital investment supporting organic revenue
initiatives and vertical integration opportunities in growth areas.

 

We completed four acquisitions during the year(4).  These have enhanced our
capabilities, creating additional opportunities in attractive market sectors
while expanding our global manufacturing footprint.  We are focused on the
delivery of benefits through the integration of our newly acquired businesses.

 

The Group continues to maintain a disciplined approach when assessing
potential acquisition opportunities and enjoys a high degree of financial
flexibility thanks to the new, enlarged debt facilities, secured in February
2022, which support Volex's ongoing growth plans.

 

Nat Rothschild, Executive Chairman said, "We have delivered an excellent
performance in a challenging environment and are now well ahead of the five
year plan we set out in October 2019. This is a validation of an effective
strategy which has created a resilient and diversified business. We continue
to pursue a number of exciting organic growth opportunities, while
successfully acquiring and integrating compelling acquisitions, leaving us
well placed for the future."

 

 

- Ends -

 

For further information please contact:

Volex plc
+44 (0) 7747 488785, investor.relations@volex.com

Nat Rothschild, Executive Chairman

Jon Boaden, Chief Financial Officer

Julian Wais, Head of Investor Relations

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

Maxim Hibbs

 

Notes:

1. The Company has compiled forecasts from four analysts with current market
forecasts for the 52 weeks ending 3 April 2022 for revenue to be in the range
of $575.0m to $586.3m, with a consensus of $581.2m, and for underlying
operating profit to be in the range of $53.8m to $54.6m, with a consensus of
$54.2m.

 

2. 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.

 

3. Our direct operational exposure to Russia and Ukraine is low. We have no
companies, facilities or employees in either country. In the most recent
financial year ended 3 April 2022, sales to Russia represented less than 0.5%
of Group revenue, with revenue into Ukraine being negligible. We have no
significant dependency on direct supplies of components or materials from
either Russia or Ukraine.

 

4. The following acquisitions were completed during the year:

 

·    Irvine Electronics, Inc (US) for total cash consideration of $16.4m -
October 2021;

·    Prodamex SA de CV (Mexico) and Terminal & Cable TC Inc. (Canada)
for combined total cash consideration of CAD$22.5m ($17.8m) - January 2022;
and

·    inYantra Technologies Pvt Ltd (India) for 51% majority equity
investment ($8.0m) and 13.5 acres of industrial land and property ($5.0m) -
the equity investment completed in March 2022 with the land and property
purchase expected to complete in the first quarter of FY2023.

 

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