Robust demand, recent acquisitions drive Volex performance
Power products and manufacturing services provider Volex reported organic revenue growth of 14.3% in its first half on Wednesday, delivering total revenue of $357.5m, including $35m from acquisitions.
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The AIM-traded firm said its underlying operating profit for the 26 weeks ended 2 October was ahead 17.6% year-on-year at $32.1m, underpinned by “robust” customer demand and “proactive management” of inflationary cost increases.
Its underlying operating margin stood at 9%, which the board said demonstrated its “effective” inflation management and cost control.
Volex said it was seeing “robust” customer demand across its markets, supported by additional contract wins with new and existing customers.
It acquired the Review Display Systems Group (RDS) in the UK in the period for an initial consideration of $6m, which it said would enhance its capabilities and accelerate growth in the market.
Integration and transition plans for recent acquisitions were progressing well, as the board also described “good progress” towards its five-year growth plan, supported by a “continued customer-led” investment programme.
The board hiked the interim dividend by 8.3%, to 1.3p per share.
“We have built a strong, resilient business, aligned to key market sectors with long-term structural growth characteristics,” said executive chairman Nat Rothschild.
“We have shown that we are capable of managing supply chain and inflationary pressures effectively, while simultaneously continuing to win new projects and expand opportunities with existing customers.
“We continue to report strong organic sales growth, building on the momentum generated last year whilst maintaining our margins within our target range and demonstrating our ability to effectively pass through inflationary-driven increases.”
Rothschild noted that in June, the company set out an “ambitious” new five-year plan, to grow revenues to $1.2bn by the 2027 financial year.
“These results demonstrate the value added by our investment programme and our ongoing ability to deliver against this plan.
“We are confident that our strategy and operating model provide us with the opportunity to deliver long-term organic growth alongside complementary, earnings-enhancing acquisitions.
“Our strong performance in the first half of the year, clear strategy and pipeline of customer opportunities underpins our confidence to reaffirm our outlook for the remainder of the year.”
At 1239 GMT, shares in Volex were down 4.08% at 261.86p.
Reporting by Josh White for Sharecast.com.