Volex Regulatory News (VLX)

15 April 2021

Volex plc

Trading update

Volex plc (AIM:VLX), the global supplier of integrated manufacturing services and power products, is pleased to provide the following update on trading ahead of the scheduled announcement of the Group's full year results for the 52 weeks ended 4 April 20211 on 17 June 2021. 

Financial and operational performance

The Group delivered a robust performance in the second half of the financial year, underpinned by strong demand from customers in the consumer electronics and electric vehicle markets.

The performance for the period includes over $52 million of revenue from electric vehicle customers, a significant increase of 187% compared to the previous year, as we expanded our customer base and product offering in this market.

There has also been an overall stabilisation in demand from our core medical and industrial markets as well as healthy year-on-year growth from data centre customers as the trend towards home-working continues.

As a result, revenue for the full year will be ahead of market expectations and be at least $440 million while underlying operating profit is expected to be at least $41 million, ahead of the most recently guided range.

Margins benefited from foreign exchange movements and favourable commodity pricing in the first half of the financial year and, although these unwound in the second half as anticipated, the Group delivered strong year-on-year margin growth. The underlying operating margin achieved for the full year represents a satisfactory balance between revenue growth and profitability. 

Although the business and operational challenges posed by Covid-19 have not abated, all sites have remained fully operational even as our local teams have prioritised keeping our employees safe.

Acquisition activity and balance sheet

The acquisition of De-Ka Elektroteknik Sanayi ve Ticaret Anonim Şirketi ("DE-KA") completed on 18 February 2021 and its integration into the wider Volex business is progressing as planned, accelerating our strategy of creating the most efficient and lowest cost global producer in the industry.

DE-KA's sales and profits are currently significantly ahead of the previous year and the business continues to enjoy very strong demand in its core, white goods markets.

Following the acquisition of DE-KA, Group net debt (excluding lease liabilities) will be approximately $6 million. Having completed a successful refinancing in November 2020, Volex retains a high degree of financial flexibility and management continues to advance targeted investment opportunities, whilst maintaining its highly disciplined approach to potential acquisitions.

The Group expects to announce a recommended dividend for FY2021 that is no less than 2.2 pence per share.

Executive Chairman, Nat Rothschild commented:

"Volex delivered a particularly strong end to the period with our resilient business model meeting the challenges posed by the Covid-19 pandemic head-on. Robust demand in the electric vehicle and consumer electronics markets underpinned our performance in the second half and, thanks to our diverse customer base and global footprint, we are well placed to deliver on the next stage of our development as we look to increase investment and grow our business. Whilst we are now entering a more challenging inflationary environment, we aim to defend the significant margin gains we have made. Unless future lockdown measures severely disrupt our customers or operations, we are confident of further revenue and profit progression in FY2022."

This announcement, released by Volex plc, contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

For further information please contact: 

Volex plc +44 (0) 7747 488 785

Nat Rothschild, Executive Chairman

Jon Boaden, Chief Financial Officer

Powerscourt - Media Enquiries +44 (0)20 7250 1446

James White

Jack Holden

N+1 Singer - Nominated Adviser and Joint Broker +44 (0)20 7496 3000

Shaun Dobson

Iqra Amin

HSBC Bank Plc - Joint Broker +44 (0)20 7991 8888

Simon Alexander

Joe Weaving

Notes:

1. All figures in this trading update are unaudited. Audited amounts will be included in our full year results announcement on 17 June 2021.