REG - Volution Group plc - Pre-close Trading Update

VolutionAnnouncement

24/07/2024 07:00

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RNS Number : 5448X  Volution Group plc  24 July 2024

 

 

Wednesday 24 July 2024

 

 

 

Volution Group plc

 

Pre-close Trading Update for the Financial Year ending 31 July 2024

 

Adjusted earnings slightly ahead underpinned by strong performance in the UK

 

Volution Group plc ("Volution" or "the Group" or "the Company", LSE: FAN), a
leading international designer and manufacturer of energy efficient indoor air
quality solutions, today is pleased to announce a scheduled Pre-close Trading
Update for the financial year ending 31 July 2024 ("FY24").

 

Further progress; expect adjusted EPS to be slightly ahead of current market
forecasts

Volution has continued to make good progress in the year ending 31 July 2024
and the Board expects adjusted earnings per share to be slightly ahead of
current market forecasts (see note 1).

 

Organic growth in H2 ahead of H1; with continued strength in UK residential

The Board is expecting to deliver Group total revenue growth on a constant
currency (cc) basis for FY24 of over 7%, within which organic growth (cc) is
expected to be slightly over 1% (H1 2024: 0.9%) despite a challenging
macroeconomic backdrop characterised by subdued levels of new construction
activity, high interest rates and weak consumer confidence.  Within this:

·    UK residential revenue has grown strongly. Our refurbishment and
improvement market, most notably public RMI, continues to benefit from strong
demand due to the ongoing heightened awareness of the health risks associated
with mould and condensation. New build systems revenue has been underpinned by
key account wins and the benefit of regulations driving housebuilders towards
adopting more sophisticated low carbon and energy efficient ventilation
solutions.  By contrast it has been a weak second half in UK commercial, and
OEM demand also remains weak albeit with year-on-year revenue declines
bottoming out in the second half as we start to lap softer comparatives.

·    Continental Europe growth has been driven by the acquisitions of VMI
in France and I-Vent in Slovenia late in FY23, with organic revenue expected
to be broadly flat at constant currency. Performance in the Nordics has
continued broadly as seen in the first half of the year, with resilient
refurbishment revenue contrasting with difficult conditions in our new build
oriented businesses in Denmark and Finland.  ClimaRad has performed strongly
in the year, whilst in Germany our additional focus on refurbishment has led
to an improved second half.

·    Australasia is expected to deliver small organic revenue growth at
constant currency, supplemented by inorganic growth from the acquisition of
DVS in New Zealand early in FY24.  Underlying performance in New Zealand,
which has been facing a challenging market environment, has been weak. In
contrast, Australia has had another strong year where we continue to gain
share.

 

Operational excellence growing our strong Group operating margins

With input cost inflationary pressures (other than labour and some overhead
areas such as facility costs) and pricing returning to more "normal"
conditions in the year, we have focused on the delivery of initiatives such as
insourcing, value engineering and factory efficiency to continue to underpin
and improve the Group's strong operating margins.  The three acquisitions
completed last year have also bedded in well, with new product introduction
and product cost initiatives already actioned in all three.  We expect to
improve Group adjusted operating margins to around 22% for the year (2023:
21.3%).

 

Strong cash generation, leverage (note 2) expected to be c.0.5x, significant
headroom for M&A

Operating cash conversion (note 2) is expected to be above our targeted level
of 90%, assisted by strong management of inventory and good working capital
management across the Group, and we therefore expect leverage at 31 July 2024
to be c.0.5x (note 3).  Acquisitions are a key part of our long-term strategy
and value creation, and we go into FY25 with ample headroom for further
earnings accretive acquisitions.

 

Ronnie George, Volution Chief Executive Officer, commented:

"In the year we celebrated 10 years as a public company, we were very pleased
to extend our value creation track record and make further strategic and
financial progress against what are widely recognised as challenging end
markets. Our refurbishment and improvement activities, representing c.70% of
the Group's activities, have continued to show resilience and our new build
activities, despite lower levels of construction activity, have been
underpinned by regulatory drivers and the requirement for more sophisticated
ventilation solutions in new lower carbon buildings.

Volution's strong focus on operational excellence has underpinned operating
profit margins, and our close focus on inventory has helped us to deliver
strong operating cash flow.  Our three more recent acquisitions have been
successfully integrated and our pipeline of acquisition opportunities remains
encouraging.

I am hugely appreciative of our near 2,000 colleagues successfully delivering
another year of "Healthy air, sustainably" and we look forward to another year
of progress in FY25."

 

Full year results

The full year results for the year ending 31 July 2024 will be announced on
Thursday, 10 October 2024.

 

 

-ends-

 

 

 

For further information:

 Volution Group plc
 Ronnie George, Chief Executive Officer                       +44 (0) 1293 441501
 Andy O'Brien, Chief Financial Officer                        +44 (0) 1293 441536

 FTI Consulting                                               +44 (0) 203 727 1340
 Richard Mountain
 Susanne Yule

 

Note:

1.     Current market forecasts for the year ending 31 July 2024 (taken
from Factset) are:

·    Adjusted earnings per share in the range of 26.7p to 27.1p with a
consensus of 26.9p

2.     Cash conversion defined as: Adjusted operating cash flow /
(Adjusted operating profit + amortisation).

3.     Leverage defined as adjusted EBITDA divided by net debt (excl.
IFRS16 liabilities)

 

Volution Group plc Legal Entity Identifier: 213800EPT84EQCDHO768.

 

Note to Editors:

 

Volution Group plc (LSE: FAN) is a leading international designer and
manufacturer of energy efficient indoor air quality solutions. Volution Group
comprises 22 key brands across three regions:

 

UK: Vent-Axia, Manrose, Diffusion, National Ventilation, Airtech, Breathing
Buildings, Torin-Sifan.

Continental Europe: Fresh, PAX, VoltAir, Kair, Air Connection, Rtek, inVENTer,
Ventilair, ClimaRad, ERI Corporation, VMI, I-Vent.

Australasia: Simx, Ventair, Manrose, DVS.

 

For more information, please go to: www.volutiongroupplc.com
(http://www.volutiongroupplc.com)

 

Cautionary statement regarding forward-looking statements

This document may contain forward-looking statements which are made in good
faith and are based on current expectations or beliefs, as well as assumptions
about future events. You can sometimes, but not always, identify these
statements by the use of a date in the future or such words as "will",
"anticipate", "estimate", "expect", "project", "intend", "plan", "should",
"may", "assume" and other similar words. By their nature, forward-looking
statements are inherently predictive and speculative and involve risk and
uncertainty because they relate to events and depend on circumstances that
will occur in the future. You should not place undue reliance on these
forward-looking statements, which are not a guarantee of future performance
and are subject to factors that could cause our actual results to differ
materially from those expressed or implied by these statements. The Company
undertakes no obligation to update any forward-looking statements contained in
this document, whether as a result of new information, future events or
otherwise.

 

 

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