REG - Volex PLC - Update on H1 Trading and Cyber Incident

VolexAnnouncement

24/10/2023 07:00

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RNS Number : 0290R  Volex PLC  24 October 2023

Volex plc

("Volex" or the "Group")

Update on H1 Trading and Cyber Incident

Volex (AIM: VLX), the specialist integrated manufacturer of critical power and
data transmission products, today issues an update on trading for the 26 weeks
ending 1 October 2023 (the "Period" or "H1") and the cyber security incident
announced on 9 October 2023.

Trading update

The Group continues to maintain strong financial momentum and is well
positioned to achieve full-year results in line with market expectations(1,2).

Revenues for the first half of the year were 4% higher than last year on an
organic, constant currency basis, against a strong comparative period.

The Group continues to benefit from its diversification strategy, now
operating in five market sectors and with a broader product offering to
provide bespoke solutions to customers. This approach creates a high degree of
resilience and flexibility during a period where demand has not been uniform
across the Group's market sectors. The easing of pressure in supply chains and
higher interest rates have caused some Electric Vehicles and Consumer
Electricals customers to closely manage inventory levels. This has been more
than offset by strong demand in Medical and Complex Industrial Technology
supported by better availability of key components. There is evidence of
de-stocking slowing in some channels, as order patterns are starting to
normalise, particularly in Electric Vehicles.

The $195 million acquisition of Murat Ticaret completed during the first half
of the year. Integration activities are well underway and initial customer
engagement has been very encouraging. There is a strong focus on delivering
incremental customer projects, and the Board also believes there will be
opportunities to realise cross-sales opportunities for the wider Group. Murat
Ticaret will contribute seven months trading in the current financial year,
whilst structurally improving Group operating margins.

Following the acquisition, the Group's covenant leverage was 1.3 times(3).
With a strong balance sheet, Volex continues to make targeted investments to
position the business for sustainable long-term growth in markets with
attractive structural characteristics.

Cyber incident

On 9 October 2023, the Group announced that it was the subject of a cyber
incident resulting in unauthorised access to certain IT systems and data at
some of the Group's international sites.

The Group confirms that all of its manufacturing sites are operational, and
now delivering full production output. The effective deployment of the Group's
business continuity strategy minimised customer disruption and there is not
expected to be any material adverse impact to revenue or underlying operating
profit as a result of the incident. Costs for the recovery and remediation of
systems are anticipated to be approximately $2 million, which will be reported
as an exceptional item in the second half of the year.

Current trading and outlook

Volex delivered a robust performance during the first half of the year,
despite the challenging backdrop, whilst executing its most significant
acquisition to date. The Board remains optimistic of a number of potential
near-term sales opportunities to make further progress in the second half of
the year, and remains on track to deliver full-year results in line with
market expectations.

Notice of results

The Group expects to release its interim results on 23 November 2023.

Nat Rothschild, Executive Chairman of Volex, commented:

 

"Volex has delivered another period of growth, with our strategy of
diversification affording the Group a high degree of resilience and
flexibility, ensuring that we remain on course to deliver on our full-year
expectations.  The integration of Murat Ticaret is progressing to plan, and
we continue to identify cross-selling and incremental revenue opportunities
with both existing and potential customers."

 

For further information please contact:

 Volex plc                             +44 (0)7971 156 431

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

 Jon Boaden, Chief Financial Officer

 

 Peel Hunt LLP - Nominated Adviser & Joint Broker      +44 (0)20 7418 8900

 Ed Allsopp

 Tom Ballard

 Ben Harrington

 

 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.    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 four analysts with current
market forecasts for the 52 weeks ending 31 March 2024 for revenue to be in
the range of $849.8 million to $891.0 million, with a consensus of $864.6
million, and for underlying operating profit to be in the range of $82.3
million to $87.0 million, with a consensus of $84.3 million.

 

3.    Covenant leverage represents the ratio of net debt, excluding
operating lease liabilities, to underlying EBITDA excluding the impact of
right of use amortisation arising on operating lease arrangements, adjusted to
include the EBITDA from the last twelve months of acquisitions on a proforma
basis. This measure is aligned with the covenant calculations used for
external debt facilities.

 

 

About Volex

 

Volex plc (AIM: VLX) is a global leader in integrated manufacturing for
performance-critical applications and a supplier of power products. We serve a
diverse range of markets and customers, with particular expertise in cable
assemblies, higher-level assemblies, data centre power and connectivity,
electric vehicles, and consumer electricals. We are headquartered in the UK
and operate from 27 manufacturing locations with a global workforce of over
11,500 people across 24 countries. Our products are sold through our own
locally based sales teams and through authorised distributor partners to
Original Equipment Manufacturers ('OEMs') and Electronic Manufacturing
Services ('EMS') companies worldwide. All of the products and services that we
offer are integral to the increasingly complex digital world in which we live,
providing power and connectivity from the most common household items to the
most complex medical equipment. For more information, please visit
www.volex.com (http://www.volex.com)

 

 

-ENDS-

 

 

 

 

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