(Sharecast News) - Specialist integrated manufacturer Volex has exceeded market expectations for the 2023 financial year, it reported in an update on Tuesday.
The AIM-traded company said revenue for the 52 weeks ended 2 April was expected to be at least $710m - an increase of 15.5% year-on-year.
Underlying operating profit was set to be at least $66m, making for annualised growth of 17.4%.
The firm said it also managed to improve gross margins and continue to control costs, resulting in underlying operating margins of 9.3%, up from 9.1% in the 2022 fiscal period.
Operating free cash flow in the second half was "considerably higher" than in the first half, with Volex managing to reduce pre-IFRS 16 net debt to around $76m - a reduction of $22m since the half-year.
The company's net debt represented a covenant leverage of 1.0x, comfortably below its target leverage corridor.
Its board said its positive performance was driven by its commercial strategy, which was focussed on targeting structural growth markets such as electric vehicles, complex industrial technology and medical sectors, as well as leveraging its global footprint and expanding its capabilities through targeted investment.
The firm said it had also managed to offset the impact of post-pandemic demand normalisation in the consumer electricals sector through market share gains.
Volex said its balance sheet and cash generation would allow it to continue investing in sustainable organic growth.
It added that it had an active acquisition pipeline of value-enhancing opportunities to support its five-year strategy, to grow revenues to $1.2bn by the end of the 2027 financial year.
"I am delighted with the strong organic growth performance delivered by the business during the period," said executive chairman Nat Rothschild.
"We continue to deliver against the long-term, strategic growth plan that we unveiled last year, and I firmly believe that Volex's diverse global footprint, ongoing investment plans and reputation for excellence will continue to drive ongoing outperformance versus our competitors.
"This, combined with our robust balance sheet and healthy cash generation, means that the group is well positioned as we enter the new financial year."
At 1221 BST, shares in Volex were up 17.53% at 247.4p.
Reporting by Josh White for Sharecast.com.
Volex (VLX)