Volex revenue, profits rise strongly in first-half

23rd Nov 2023 12:10

(Sharecast News) - Integrated manufacturing and power products company Volex reported first-half revenue of $397.5m on Thursday, increasing 11.2% year-on-year.

The AIM-traded firm said growth was driven by a 4.2% organic growth in constant currency.

The underlying operating profit was ahead by 16.5% at $37.4m, with the underlying operating margin strengthening to 9.4% thanks to prudent cost management and an improved sales mix.

Volex recorded a notable enhancement in underlying free cash flow, delivering $11.9m, while working capital improved compared to the prior period.

Despite the acquisition of Murat Ticaret Kablo Sanayi for $195m during the half-year, Volex managed its net debt effectively, which stood at $173.7m at the end of the period, compared to $117m a year earlier.

The company's period-end covenant leverage of 1.3x comfortably fell within its target corridor of 1.0x to 2.0x.

It said the integration of Murat Ticaret was progressing positively, with solid customer engagement and cross-sales opportunities on the horizon.

Volex added that it was advancing towards its five-year strategic plan, supported by targeted investments to expand capacity and capabilities.

Market-wise, Volex's diversified exposure across various sectors was beneficial, with strong demand in the medical sector, normalisation of demand in consumer electricals across North American and Asian markets, substantial growth in complex industrial technology, and the acquisition of Murat Ticaret in the off-highway sector all contributing to its growth.

Looking ahead, Volex said it was confident in achieving its long-term objectives and meeting full-year market expectations.

The board explained that the company's diverse market exposure, robust customer pipeline, and strategic acquisitions provided a strong foundation for sustainable, long-term growth.

Given its strong balance sheet, it planned to continue investing in organic growth projects and remained flexible for potential future acquisitions.

"Our business is in exceptional shape, demonstrating resilience and diversity in its operations," said executive chairman Nat Rothschild.

"We employ a management model that is working effectively and enables us to pursue sustainable growth whilst maintaining margins. In parallel, our commitment to supporting customers remains steadfast as we effectively manage supply chains, regardless of fluctuations in demand.

"I am delighted to confirm that we are well on track to achieve the objectives outlined in our ambitious five-year plan."

At 1146 GMT, shares in Volex were up 1.01% at 300.5p.

Reporting by Josh White for Sharecast.com.