Last checked at 9 Feb 2010 07:00
9 February 2010
VOLEX GROUP plc
Interim Management Statement for the 18 weeks ended 9 February 2010
Volex Group plc, the global electrical and electronic cable assemblies group, today releases its second Interim Management Statement for the FY2010 financial year, covering the 18 weeks ended 9 February 2010.
As indicated in the trading update released on 12 January 2010 group revenue has continued to trend upwards quarter-on-quarter, driven by strength in the consumer focused Power Products sector, which is starting to see improved OEM demand, while Interconnect remains adversely impacted by industry conditions and delayed network rollout, principally in India and China.
Favourable commodity prices and ongoing progress in the cost saving programmes has delivered further modest quarter-on-quarter improvements in gross margins, while the improvement in year-on-year gross margins is more substantial. Importantly, with initiatives underway to align the Group's manufacturing capacity and support facilities more closely with its customer base and market environment, the Group expects to be well positioned to capitalise on a more sustained economic recovery, as and when it occurs.
Highlights for the third quarter of FY2010 (three months to 3 Jan 2010) are as follows:
·; Revenue from continuing operations of £58m, up 3% on Q2 FY2010 (down 11% on same period last year, at constant currency)
·; Gross margin of 21.4%, 1.3pts up on H1FY2010 and 6.4pts ahead of same period last year
·; Operating profit(i) from continuing operations of £3.4m, up 9% on Q2 FY2010 (up 10% on same period last year, at constant currency)
·; Net debt of £11.3m held at half year level, compared with £23.0m at the same point last year
(i) before non-recurring items and share based payments
Power Products revenue in the third quarter of £37m was 5% up on Q2. Although down compared to the third quarter of last year (down 2% at constant currency), performance relative to last year is on an improving path as OEM demand improves. Much of the improvement in trading has been driven by strong sales in Asian markets as our customers continue to migrate their manufacturing capability east. Power Products gross margin in the third quarter increased to 23.4% from 21.1% in the first half due to manufacturing efficiencies and a favourable impact from commodity prices. As a result third quarter operating profit was 22% up on the second quarter and 90% up on the third quarter of last year, at constant currency.
Interconnect revenues in the third quarter were flat on Q2 and 23% down (at constant currency) on the third quarter of last year, as our telecoms customers, particularly in Europe and North America continued to face challenging market conditions with delayed network infrastructure rollouts in China and India. Trading in the Healthcare sector (approximately 30% of total Interconnect) has fared better, with Healthcare revenue in the third quarter showing a modest improvement over Q2. Although Interconnect gross margins in Q3 decreased slightly to 18.1% from 18.6% in the first half of the year, they remained well ahead of last year.
The Group continued to manage its cash and borrowings effectively with net debt at the end of the third quarter of £11.3m in line with management's expectations, ahead of traditionally strong cash generation in the fourth quarter.
As communicated in the trading update released on 12 January 2010, the Board remains cautious on the company's short term prospects in the face of continued global economic uncertainties. However, as further noted in that announcement, the Board is comfortable that the company will meet or exceed the previous full year guidance on the trading outlook for the twelve months to 4th April 2010.
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Volex Group plc
Ray Walsh, Group Chief Executive +44 20 3370 8833 Andrew Cherry, Group Finance Director +44 20 3370 8833
Weber Shandwick Financial
Terry Garrett / Nick Dibden / Katie Matthews +44 20 7067 0700