Volex to resume dividend payments as trading tops expectations

Volex's shares climbed on Thursday after the company said it intends to resume dividend payments after trading across the group was ahead of market expectations.

The cable assemblies provider said full-year sales are expected to exceed $365m, compared to the $322m recorded the year before, while cash as at 22 March stood at $18.4m, down from $24.9m reported at the half year after the company invested $16.5m into its acquisition of GTK in December 2018

Therefore, the London-listed company has generated $10.0m of net free cash flow over the second half of the year.

Nat Rothschild, executive chairman of Volex, said: "As announced at the time of the first-half results in November 2018, competition continued to be intense in the second half, and cost inflation has continued across both our raw material and labour cost lines. However, Volex has again produced a solid performance in both sales and operating margins."

Consequently, Volex said it will resume the payment of a dividend in respect of the 2019/20 financial year, assuming trading continues to perform in line with expectations and no material acquisitions are made during the period.

"There remain substantial identifiable opportunities for both divisions to improve sales and margin performance through disciplined execution of our strategy, in both the short and longer term, and we expect to deliver a robust trading performance for the full year, ahead of the board's expectations. The board remains excited about the company's ability to drive shareholder value, and our team continue to actively look for new opportunities to grow our business and technical capabilities," said Rothschild.

Volex's shares were up 12.44% at 94.00p at 1703 GMT.