Trading Statement

RNS Number : 3727E

Volex PLC

09 April 2014

 



9 April 2014

Volex plc

Trading Update

Revenues and net debt better than market expectations

Execution of the Volex Transformation Plan on track

Volex plc ("Volex" or the "Group"), the global provider of power and data cabling solutions, today announces its Trading Update for the year ended 30 March 2014 in advance of preliminary results that are scheduled to be announced in mid-June 2014.

Results for year ended 30 March 2014

The Group is making good progress in delivering its transformation plan with clear signs that the return to revenue growth is now being achieved.

While, historically, the second half of the financial year has always delivered lower revenues than the first half, in the year just ended this trend has been reversed. In consequence, total revenues for the year ended 30 March 2014 were ahead of consensus market expectations.

Revenues are growing as a result of Volex better leveraging its global presence, operational excellence and increased focus on price competiveness. In the short term, this has led to reduced gross margins and an impact on operating profit. As previously announced, underlying operating profits in the year ended March 2014 will be materially lower than prior year, but within the range of market expectations.

Net debt at 30 March 2014 was $33 million which is lower than expected, even after taking account of the $11 million raised in December 2013 by way of a placing of new shares and the return of cash to the Company from a sale of shares held by the EBT.

Update on Volex Transformation Plan

We are encouraged by the progress made since November 2013 in executing the Volex Transformation Plan.

Revenue growth within both the Power and Data Divisions is a key objective for the year ahead and it is pleasing to report that progress is being made in this regard. Growth in order intake is being delivered from existing and new customers with increased allocations of current products and new products also being launched.

Existing Customers

The strategy of ensuring that the Group can deliver upon its customers' price expectations has meant that allocations with many of our larger customers have increased in recent weeks providing confidence that revenue growth will continue throughout the year to March 2015. 

Furthermore, as an important supplier of the data cables for the roll-out of 4G mobile phone technology in China there is further opportunity for growth associated with this major infrastructure upgrade. 

New Customers

The enhanced regional focus of the sales operations has led to initial success in winning business from new customers and it is pleasing to report that the Greater China team has just secured initial orders with Xiaomi, one of China's leading and fastest growing mobile internet companies, to supply power cables for its new audio visual product range.

The Group is also increasingly seeing the benefits of its global manufacturing and sales footprint as multinational customers move to suppliers who can provide more localised manufacturing and sourcing.

Supply Chain

A key element of the Volex Transformation Plan is to increase cost competitiveness continuously through procurement savings. We have delivered some initial results in this regard and we have set aggressive targets for the months to come. At present a significant proportion of these savings have been committed by our supplier base, although there is still further progress to be made. We anticipate that the benefits of these cost savings will feature more strongly in the second half of the new financial year and that margins will gradually improve. Thereafter, as revenues and factory utilisation rise and raw material price reductions are delivered, profitability is expected to increase further.

Christoph Eisenhardt, CEO of Volex, commented:

"I am delighted with the good progress that is being made with the transformation plan and we are particularly pleased with the revenue growth delivered in the second half of the financial year. Order intake for the new financial year is also encouraging. This reflects our strong focus upon addressing the growing markets of power and data cable solutions, leveraging our global presence and improving cost competitiveness. As we move through 2014 we look forward to delivering further cost savings as set out in our plan."

For further information please contact:

Volex plc

Christoph Eisenhardt                         Chief Executive Officer       [phone]

Nick Parker                                           Chief Financial Officer       [phone]

Tulchan Communications

Christian Cowley / James Macey White                                         [phone]

Notes:

1.     The Board believes current range market forecasts for Revenues and EBIT for the year ended 30 March, 2014 are: -

·      Revenues: $390m to $400m with a consensus of $395m

·      Underlying operating profit: $4.5m to $7.0m with a consensus of $5.9m.

2.    A copy of this announcement, together with other information about Volex may be viewed on its website:  www.volex.com

 

END

 

 

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