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Volex profit rises 17%; sees slight full-year beat

By BFN News | 07:28 AM | Friday 09 November, 2018


Power chord and cable assembly supplier Volex booked a 17% rise in first-half profit and tipped a full-year performance 'slightly' ahead of market expectations, as acquisition helped boost sales and it improved its operating margins. Pre-tax profit for the six months through September rose to $4.9m, as revenue rose 13% to $182.4m. Underlying pre-tax profit doubled to $9.0m. Volex said it had achieved significant profit margin improvement in its power division following a move to reduce excess capacity in Shenzhen and consolidate PVC production in Zhongshan. The company had also exited low-margin business and successfully managed input cost inflation, it added. 'I am pleased to report that the actions we have taken over the past two years are reflected in the solid financial results announced today,' executive chairman Nat Rothschild said. 'This progress has been made possible by a rejuvenated management team with a clear strategy focused on driving shareholder returns.' Rothschild said Volex's core markets were expected to remain highly competitive, while US trade tariffs imposed on China imports had created uncertainty in the marketplace. 'However, the board believes that the increase in tariffs from 10% to 25% in January 2019 provides the group with a competitive opportunity,' he added. 'Few of Volex's China based competitors have an international factory footprint and we are already engaging with customers about the possibility of transferring production from China to one of our alternate factories.' 'Going forward, we are seeing the cost price pressure ease with the copper price dropping back and the US dollar strengthening against our key manufacturing currencies. ' 'With a continuing strong sales pipeline, the board is optimistic about the future outlook and expects full year trading performance slightly ahead of market expectations.' Rothschild also said the company was in discussion with several potential acquisition targets, with further announcements expected in the second half. Story provided by StockMarketWire.com

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