Volex ends year ahead of market expectations
By Josh White
Date: Wednesday 20 Apr 2022
(Sharecast News) - Power products and manufacturing services provider Volex said in an update on Wednesday that its revenues and underlying operating profits were set to be ahead of consensus market expectations for the year just ended.
The AIM-traded company said it was now anticipating revenues for the 52 weeks ended 3 April to be more than $605m (£464.09m), up from $443m year-on-year, and underlying operating profit to be in excess of $55m, rising from $42.9m.
It said it had continued to trade "strongly", delivering "robust" organic revenue growth, including a significant contribution from its electric vehicles sector where revenue had near-doubled.
Demand increased during the year, the board said, with greater visibility of forward orders as customers looked to secure manufacturing capacity.
The group said it was effectively managing global supply chain challenges, responding to meet customer expectations.
Working capital increased due to the growth in sales, as well as investment in higher levels of inventory to maintain its 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," the board said in its statement.
"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."
In the current global inflationary environment, meanwhile, Volex said its ability to pass through increased costs to customers, protecting its profitability while maintaining competitiveness, had been important.
"Our global teams have deep relationships with customers, enabling efficient and regular mechanisms to modify costs as required."
As planned, during the year the company made strategic, targeted investment in production facilities, equipment, IT and people to support its long-term growth objectives.
The directors said the "strategic diversification" achieved in recent years positioned the group well, with capital investment supporting organic revenue initiatives and vertical integration opportunities in growth areas.
Volex completed four acquisitions during the year, which it said enhanced its capabilities, created additional opportunities in "attractive" market sectors, and expanded its manufacturing footprint.
The group said it was maintaining a "disciplined approach" when assessing potential acquisition opportunities, and enjoyed a "high degree" of financial flexibility thanks to its new, enlarged debt facilities secured in February.
"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," said executive chairman Nat Rothschild.
"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."
At 1057 BST, shares in Volex were up 15.48% at 285.24p.
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