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(Alliance News) - Power cords firm Volex PLC brought returned to the dividend list on Thursday for the first time in six years following a strong interim performance.
Richmond, London-based Volex is returning 1.0 pence per share to shareholders for the six months to September 29. This, it said, is due to the firm now being cash generative and profit generating in both units.
Pretax profit for the half doubled to USD9.7 million, with the underlying figure surging 70% to USD15.3 million. Volex's revenue rose 7.3% to USD195.7 million.
"I am delighted to announce that Volex will recommence the payment of a dividend, starting with an interim dividend of one pence per share," said Executive Chair Nat Rothschild.
"This is the first dividend we have paid since 2013, and it has been made possible due to the significant re-positioning seen across our business during that period. We are now cash generative, creating healthy profits across our two business divisions, and in acquisitive growth mode."
Volex's profit has grown for several reasons, it said, including higher margins in the Complex Assemblies business and lower input costs. Volex has achieved this by negotiating lower supply costs, including for copper, alongside favourable foreign exchange movements.
Complex Assemblies revenue rose 34% to USD103.6 million, in part helped by acquisitions. Underlying operating profit more than doubled, with the underlying operating margin 11.2% from 6.7%.
However, Volex's Power Cords unit suffered a 13% decline in revenue to USD91.1 million, and underlying operating profit fell 12%. The revenue drop came from a decision to reduce business with a major consumer electronics customer, and there will be further declines from this customer in the second half, offset partially by work with new clients.
"Volex has again delivered a solid first-half performance with growth in trading profit and margins. Despite macroeconomic headwinds, our business is proving resilient," the company said.
"There are further significant opportunities for each of our business units to improve both sales and margin performance through rigorous execution of the strategy, in both the short and longer term. The board remains confident of delivering its full-year expectations and in the company's ability to drive shareholder value."
Shares were 4.6% higher on Thursday morning in London at 113.00 pence each.
By George Collard; georgecollard@alliancenews.com
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