Update on H1 Trading and Cyber Incident

Volex PLC

24 October 2023

 

Volex plc

("Volex" or the "Group")

Update on H1 Trading and Cyber Incident

Volex (AIM: VLX), the specialist integrated manufacturer of critical power and data transmission products, today issues an update on trading for the 26 weeks ending 1 October 2023 (the "Period" or "H1") and the cyber security incident announced on 9 October 2023.

Trading update

The Group continues to maintain strong financial momentum and is well positioned to achieve full-year results in line with market expectations^1,2.

Revenues for the first half of the year were 4% higher than last year on an organic, constant currency basis, against a strong comparative period.

The Group continues to benefit from its diversification strategy, now operating in five market sectors and with a broader product offering to provide bespoke solutions to customers. This approach creates a high degree of resilience and flexibility during a period where demand has not been uniform across the Group's market sectors. The easing of pressure in supply chains and higher interest rates have caused some Electric Vehicles and Consumer Electricals customers to closely manage inventory levels. This has been more than offset by strong demand in Medical and Complex Industrial Technology supported by better availability of key components. There is evidence of de-stocking slowing in some channels, as order patterns are starting to normalise, particularly in Electric Vehicles.

The $195 million acquisition of Murat Ticaret completed during the first half of the year. Integration activities are well underway and initial customer engagement has been very encouraging. There is a strong focus on delivering incremental customer projects, and the Board also believes there will be opportunities to realise cross-sales opportunities for the wider Group. Murat Ticaret will contribute seven months trading in the current financial year, whilst structurally improving Group operating margins.

Following the acquisition, the Group's covenant leverage was 1.3 times³. With a strong balance sheet, Volex continues to make targeted investments to position the business for sustainable long-term growth in markets with attractive structural characteristics. 

Cyber incident

On 9 October 2023, the Group announced that it was the subject of a cyber incident resulting in unauthorised access to certain IT systems and data at some of the Group's international sites.

The Group confirms that all of its manufacturing sites are operational, and now delivering full production output. The effective deployment of the Group's business continuity strategy minimised customer disruption and there is not expected to be any material adverse impact to revenue or underlying operating profit as a result of the incident. Costs for the recovery and remediation of systems are anticipated to be approximately $2 million, which will be reported as an exceptional item in the second half of the year.

Current trading and outlook

Volex delivered a robust performance during the first half of the year, despite the challenging backdrop, whilst executing its most significant acquisition to date. The Board remains optimistic of a number of potential near-term sales opportunities to make further progress in the second half of the year, and remains on track to deliver full-year results in line with market expectations.

Notice of results

The Group expects to release its interim results on 23 November 2023.

Nat Rothschild, Executive Chairman of Volex, commented:

"Volex has delivered another period of growth, with our strategy of diversification affording the Group a high degree of resilience and flexibility, ensuring that we remain on course to deliver on our full-year expectations.  The integration of Murat Ticaret is progressing to plan, and we continue to identify cross-selling and incremental revenue opportunities with both existing and potential customers." 

For further information please contact:

Volex plc Nat Rothschild, Executive Chairman Jon Boaden, Chief Financial Officer

[phone] [e-mail]

Peel Hunt LLP - Nominated Adviser & Joint Broker Ed Allsopp Tom Ballard Ben Harrington

[phone]

HSBC Bank plc - Joint Broker Simon Alexander Joe Weaving

[phone]

Powerscourt - Media Enquiries James White   Nicholas Johnson	[phone]

Notes:

1.    This trading update is based upon unaudited management accounts information. Forward-looking statements have been made by the Directors in good faith using information available up until the date that they approved this statement. Forward-looking statements should be regarded with caution because of the inherent uncertainties in economic trends and business risks.

2.    The Company has compiled forecasts from four analysts with current market forecasts for the 52 weeks ending 31 March 2024 for revenue to be in the range of $849.8 million to $891.0 million, with a consensus of $864.6 million, and for underlying operating profit to be in the range of $82.3 million to $87.0 million, with a consensus of $84.3 million.

3.    Covenant leverage represents the ratio of net debt, excluding operating lease liabilities, to underlying EBITDA excluding the impact of right of use amortisation arising on operating lease arrangements, adjusted to include the EBITDA from the last twelve months of acquisitions on a proforma basis. This measure is aligned with the covenant calculations used for external debt facilities.

About Volex

Volex plc (AIM: VLX) is a global leader in integrated manufacturing for performance-critical applications and a supplier of power products. We serve a diverse range of markets and customers, with particular expertise in cable assemblies, higher-level assemblies, data centre power and connectivity, electric vehicles, and consumer electricals. We are headquartered in the UK and operate from 27 manufacturing locations with a global workforce of over 11,500 people across 24 countries. Our products are sold through our own locally based sales teams and through authorised distributor partners to Original Equipment Manufacturers ('OEMs') and Electronic Manufacturing Services ('EMS') companies worldwide. All of the products and services that we offer are integral to the increasingly complex digital world in which we live, providing power and connectivity from the most common household items to the most complex medical equipment. For more information, please visit www.volex.com   

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