Volex margins hit by commodity prices

16th Feb 2011 12:56

All divisions at power cords supplier Volex have seen a strong growth in revenue, but margins continue to be affected by rising copper prices.Group revenue for the three months to 2 January grew 37% to £79.1m, with both businesses in the larger Consumer and Telecom/Datacom sectors seeing a 28% increase. Volex has also seen substantial momentum in the less-weighted Healthcare and Industrial sectors, with revenues rising by 84% and 61%, respectively."Organic sales and new product development initiatives have enhanced penetration of existing accounts and are starting to generate new account wins," the group says.However, rising raw materials prices (particularly copper and, to a lesser extent, oil) have reduced margins to 18% in the period, as input prices have led to double-digit labour rate increases."Management continues to be active in mitigating these rising costs, including programmes to pass through these increases to customers through price rises."Margins in the second quarter were 19.6%, and were 20.2% for the 2010 full year.