Pre-close Trading Update

RNS Number : 2108T

Volution Group plc

21 July 2022

 

Embargoed until 7:00am

Thursday 21 July 2022

Volution Group plc

Pre-close Trading Update for the Financial Year ending 31 July 2022

Earnings at top end of market expectations with strong sales growth and 21% margins maintained

Volution Group plc ("Volution" or "the Group" or "the Company", LSE: FAN), a leading international designer and manufacturer of energy efficient indoor air quality solutions, today releases a scheduled Pre-close Trading Update for the financial year ending 31 July 2022.

Highlights

The Group expects to deliver another strong performance in the financial year, as we continue to benefit from our diverse geographic and end market sector exposure, our acute focus on customer service, agile supply chain management and the long-term underpin from local regulatory drivers in our markets.

· Full year adjusted Earnings Per Share (EPS) expected to be at the top end of the range of market expectations^1.

· Revenue is expected to grow to approximately £308m, c.13% ahead of the prior year, with organic revenue growth at constant currency (cc) expected to be over 7%.

· Group operating margins of c.21% maintained as our strong trade brands implemented early and decisive pricing initiatives.

· Ongoing proactive inventory and supply chain management has enabled us to continue to provide good levels of customer service across the Group.

· Acquisition in September 2021 of Energy Recovery Industries ("ERI"), a leading producer of heat exchangers for heat recovery ventilation products, completed and performing well.

· Excellent progress with our "Product, Planet, People" sustainability initiatives, increasing the proportion of our revenue from low carbon products and recycled plastics content in our own production.

· Cash generation in the second half of the year is expected to be good following the first half in which we invested in additional inventory to mitigate supply chain challenges.  We expect leverage (excluding leases) to be c.0.9x adjusted EBITDA at the year end.

Organic revenue growth in all three geographic regions

UK revenue is expected to grow by over 6% (cc) compared to the prior year. Our second half, and notably our recent performance in May and June, has been strong in social housing refurbishment and new build residential systems, with the latter benefitting from the recent changes to Part F and L within the UK building regulations which provide further structural tailwinds for future demand. Commercial revenue has been relatively slower during the second half, however the outlook is improved as we have secured a sizeable c.£2m project order for a flagship new London commercial office with supplies commencing later this calendar year . Ongoing strong demand for our energy efficient range of EC3 motorised impellers, where we have invested to increase capacity, has driven good revenue growth in our OEM business.

We expect revenue in Continental Europe to close the year approximately 30% ahead of the prior year on a constant currency basis.  Germany is currently delivering excellent revenue growth with our leading range of decentralised heat recovery products well supported by local regulations, whilst in Denmark we have delivered good revenue growth for centralised heat recovery systems for residential applications.  ERI is delivering strong revenue growth over the prior year, and our previously announced €2.6m capital investment to expand production capacity is well underway and we expect to complete the project later in the next calendar year.

Australasia is expected to deliver constant currency revenue growth of approximately 10%.  In New Zealand our revenue for the year is expected to be slightly behind the strong prior year comparators in which we enjoyed the benefit of both "post Covid" residential refurbishment demand and the benefit of the implementation of the Healthy Homes legislation which prescribed the need for ventilation in private rental properties. In Australia, we continue to gain market share and grow strongly with July expected to be significantly ahead of the prior year, all supported by continued enhancement of the product range and activity from our winning a key retail account in the prior year. 

Ronnie George, Chief Executive Officer of Volution, commented:

"Volution expects to deliver another year of strong revenue growth. Our early action to invest in additional inventory to support good levels of customer service, our pricing initiatives, and the agility of our commercial teams in maintaining operating margins will deliver a strong set of results.

I am particularly proud of progress with our sustainability initiatives and the Group wide engagement of our colleagues in spearheading our low carbon revenue growth and significant increase in the use of recycled materials in our production facilities.

Whilst we are mindful of the wider macroeconomic backdrop, Volution continues to benefit from a diverse geographic and varied end market sector exposure, as well as increasing regulatory drivers for our energy efficient indoor air quality solutions, which provides us with confidence in making further progress in the year ahead."

Full year results

The Group expects to announce its preliminary results for the year ending 31 July 2022 on Thursday, 6 October 2022.

Notes:

1. The Board believes current market forecasts for adjusted earnings per share to be in the range of 22.9-23.8 pence per share.

-ends-

For further information: 

Volution Group plc
Ronnie George, Chief Executive Officer	[phone]
Andy O'Brien, Chief Financial Officer	[phone]
Tulchan Communications	[phone]
James Macey White
Martin Pengelley

Volution Group plc Legal Entity Identifier: 213800EPT84EQCDHO768.

Note to Editors:

Volution Group plc (LSE: FAN) is a leading international designer and manufacturer of energy efficient indoor air quality solutions.  Volution Group comprises 19 key brands across three regions:

UK: Vent-Axia, Manrose, Diffusion, National Ventilation, Airtech, Breathing Buildings, Torin-Sifan.

Continental Europe: Fresh, PAX, VoltAir, Kair, Air Connection, Rtek, inVENTer, Ventilair, ClimaRad, ERI Corporation.

Australasia: Simx, Ventair, Manrose.

For more information, please go to: www.volutiongroupplc.com

Cautionary statement regarding forward-looking statements

This announcement may contain forward-looking statements which are made in good faith and are based on current expectations or beliefs, as well as assumptions, about future events. You can sometimes, but not always, identify these statements by the use of a date in the future or use of forward-looking terminology, including the terms "aims", "ambition",  "will", "anticipates", "aspire", "believes", "continue", "could", "estimates", "expects", "projects", "intends", "plans", "should", "may", "assumes", "seeks", "should" or "would" and other similar words or, in each case, their negative or other variations. By their nature, forward-looking statements are inherently predictive and speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and are not historical facts. By their nature forward-looking statements involve risk and uncertainties because they related to events or uncertainties and depend on circumstances that may or may not occur in the future and/or are beyond the Group's control and/or rely on assumptions that may or may not transpire to be correct. You should not place undue reliance on these forward-looking statements, which are not a guarantee of future performance and are subject to factors that could cause our actual results to differ materially from those expressed or implied by these statements. The statements contained herein speak only as at the date of this announcement and the Company undertakes no obligation to update any forward-looking statements contained in this announcement, whether as a result of new information, future events or otherwise, except as required by law.

 

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