Interim Management Statement

RNS Number : 9455P

Volex Group PLC

27 July 2010

 



For immediate release                                                                                                     27 July 2010

VOLEX GROUP plc

Interim Management Statement for the 16 weeks ended 27 July 2010

Volex Group plc ('Volex' or the 'Group'), the global electrical and electronic cable assemblies group, today releases its first Interim Management Statement for the FY2011 financial year, covering the 16 weeks ended 27 July 2010.

Trading momentum established during the last financial year (FY2010) has continued in the first quarter of FY2011, with revenue growth accelerating significantly beyond growth rates reported last year.

Highlights for the first quarter of FY2011 (three months to 4 July 2010) are as follows:

·       Revenue of £75m, up 23% on Q4 FY2010 (19% on constant currency basis) and up 39% on Q1 FY2010 (33% on constant currency basis)

·       Gross margin of 19.7%, 0.2pts down on previous quarter and 0.5pts ahead of same quarter last year

·       Operating profit⁽ⁱ⁾ of £4.0m, up 5% on Q4 FY2010 and up 33% on Q1 FY2010

·       Net debt of £5.0m at end of Q1 FY2011, a £2.6m (34%) improvement since the end of last financial year and £12.8m (72%) better than at the end of Q1 FY2010

 (i) before share based payments charge

All four of our sectors (Telecom/Datacom, Healthcare, Consumer and Industrial) have experienced double digit percentage growth rates quarter-on-quarter with revenue growth in the Consumer and Telecom/Datacom sectors particularly strong. While all sectors have benefited from the improving economic environment, incremental revenue from new products and organic Sales initiatives has also been a significant feature.

The Group maintains its focus on increasing the proportion of value added Volex content in its products and on improving manufacturing efficiencies. We are also targeting strategic product development and new account opportunities in order to capitalise on improved trading conditions and to generate a platform for sustained growth and margin improvement.

Consumer sector revenue of £48m in Q1 has increased 19% quarter-on-quarter and 50% compared to Q1 of FY2010, both in constant currency terms, representing an acceleration of the quarterly sequential revenue growth reported last year. Our customers in this sector, particularly in Asia, have seen increased consumer confidence, as the global economic recovery gathers pace, and have increased manufacturing volumes accordingly. In addition to these macro-economic factors, we have been successful in increasing sales from our new environmentally-friendly products (including halogen-free and Phthalate-free) and have made progress in further developing our strategic partnerships with our global consumer electronics customers.

Revenue in the Telecom/Datacom sector of £16m in the first quarter represented an improvement of 26% over Q4 FY2010 and a 5% deterioration compared to the first quarter of FY2010 (again both in constant currency terms). The sector has enjoyed strong sequential growth driven by increased sales to Chinese telecoms OEM customers and improved, though still challenging, market conditions in India.

Trading in the Healthcare and Industrial sectors continued on the upward path established last financial year, with Q1 FY2011 revenue of £6m in Healthcare and £5m in Industrial, up 8% and 10% on Q4 FY2010, respectively, at constant currency.

As with revenue, the Group continued its trend of sequential improvement in quarterly profits. Operating profit for the quarter of £4.0m represented a significant improvement of 33% over Q1 FY2010 and 5% in quarter-on-quarter terms.

The Group also made good progress in its strategic objective of repaying debt, reducing net debt at the end of the first quarter of FY2011 to £5.0m from £7.6m at the end of FY2010, despite the increase in trading activity. This represents a 72% improvement when compared to net debt at the end of Q1 FY2010 of £17.8m.  

Although pleased with performance in the first quarter, the Board recognises that Volex is at an early stage in its return to growth and remains aware of the significant work ahead. However, the Board is comfortable that the Group will meet or exceed the previous full year guidance on the trading outlook for the twelve months to 3 April 2011.

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Volex Group plc

Ray Walsh, Group Chief Executive                                                       [phone]

Andrew Cherry, Group Finance Director                                              [phone]

Buchanan Communications

Charles Ryland / Jeremy Garcia                                                            [phone]

 

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