REG - Volex PLC - Trading Update

VolexAnnouncement

27/01/2025 07:00

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RNS Number : 6961U  Volex PLC  27 January 2025

 

 

27 January 2025

Volex plc

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

 

Trading Update
Strong organic growth continues providing confidence in the full year outturn

 

Volex (AIM: VLX), the specialist integrated manufacturer of critical power and
data transmission products, today releases a trading update for the 39 weeks
ended 29 December 2024.

 

The Group delivered a robust performance in Q3, maintaining the strong organic
growth momentum demonstrated in the first half of the year, while continuing
to invest in future growth opportunities and maintaining margins.

 

In the financial year-to-date, revenue was $789.4 million, an increase of
21.8% on the comparative prior year period. This comprises organic growth of
9.6%, 13.1% from acquisitions, and a small adverse impact from foreign
exchange movements. Sequentially, sales increased by 2% compared to Q2,
reflecting continued momentum across core markets. Demand from Electric
Vehicles customers continues to deliver significant organic growth. Consumer
Electricals has continued to perform strongly. Medical sales have softened
slightly, continuing the normalisation trend seen in the first half of the
year and reflecting a stronger comparative in the second half of the previous
year. Complex Industrial Technology growth has improved relative to the first
half, particularly for other industrial customers. Off-Highway growth rates
have normalised with some end markets showing subdued demand.

 

Operating profit margins have been maintained within our target range,
supported by pricing discipline and the effective management of operational
costs.

 

Strong financial position supports further investment in growth

 

Net debt at the end of Q3 was $151 million, resulting in a covenant
leverage(1) ratio of 1.3x, in line with the position at the end of the first
half. Working capital improved in Q3 despite increased demand from a major
data centre customer, resulting in higher levels of inventory in North
America. In early January, the Company satisfied the first tranche of deferred
cash consideration for the 2023 acquisition of Murat Ticaret of €10m. In
addition, the Group has exited from its investment in shares of TT Electronics
plc, recognising a small profit after taking account of the associated
professional fees.

 

The performance of the Group and strong financial position continues to
provide a platform for our ongoing programme of targeted investment to deliver
growth as part of our five-year plan. This included significant capacity
expansions in high-growth economies including India and Indonesia during the
year. In addition, we are investing in further vertical integration and
automation to support our growing Electric Vehicles customer base.

 

Outlook

 

The Group's underlying operating profit(2) expectations for the full year
remain unchanged and are in line with market forecasts(3). Positive customer
interactions underpin confidence in sustaining high single-digit organic
growth for the full year, as well as maintaining margins in the target
corridor of 9%-10%.

 

While mindful of ongoing macroeconomic uncertainties, the Group is
well-positioned to capitalise on a number of attractive opportunities across
its diversified and specialist end markets. Continued focus on delivering
value-added solutions, operational efficiencies and disciplined capital
allocation supports the Board's confidence in delivering sustainable and
profitable growth.

 

Nat Rothschild, Volex's Executive Chairman said:

"Our Q3 performance reflects the strength of our business model and our
ability to deliver consistent growth across diverse markets. With robust
momentum, strategic investments in high-growth areas and a strong financial
position, we are well-placed to capitalise on opportunities and deliver
sustained profitable growth, keeping us firmly on track to achieve our
full-year expectations and five-year strategy."

 

-ENDS-

( )

(1) 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.

 

(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) As at 22 January 2025, the average of company compiled analysts' forecasts
for the 52 weeks ending 30 March 2025 for revenue is $1,031.4 million with a
range of $1,027.7million to $1,040.0 million, the average for underlying
operating profit is $96.7 million, with a range of $95.7 million to $97.6
million.

 

 

 

 

For further information please contact:

 

 Volex plc                                             +44 (0) 1256 442570
 Nat Rothschild, Executive Chairman                    investor.relations@volex.com
 Jon Boaden, Chief Financial Officer

 Peel Hunt LLP - Nominated Adviser & Joint Broker      +44 (0) 20 7418 8900
 Ed Allsopp
 Dom Convey
 Tom Graham

 Jefferies - Joint Broker                              +44 (0) 20 7029 8000
 Philip Noblet
 Sam Barnett
 Harry Le May

 Sodali & Co - Media Enquiries                         +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 29 advanced manufacturing facilities,
uniting 14,000 dynamic individuals from 25 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.

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