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Volex PLC (VLX)

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Thursday 16 April, 2020

Volex PLC

Trading Update

RNS Number : 7982J
Volex PLC
16 April 2020
 

16 April 2020

 

Volex plc

("Volex" or the "Company")

 

Trading Update

 

Volex plc (AIM: VLX), the global provider of complex assemblies for performance critical applications and power products, issues the following trading update ahead of the announcement on 18 June 2020 of its full-year results for the year ended 5 April 2020.

 

· The Company reiterates current guidance for the financial year ended 5 April 2020;

 

· Full-year sales expected to exceed $392 million (FY2018/19: $372 million). Combined sales for February and March (the period since the outbreak of the COVID-19 virus) were $68 million (FY2018/19: $63 million);

 

· Net cash as at 5 April 2020 of $31.7 million compares with $7.9 million reported at the half year. We intend to declare a final dividend of 2 pence per share based on our full-year results;

 

· Looking ahead, it appears likely that economic activity and consequently trading will be impacted by restrictive governmental measures put in place to contain the spread of Covid-19. However, the quantum and precise impact will depend on the length of time such measures are in place and their severity, offset against our defensive exposure to medical devices and data-centre products, which make up approximately two-thirds of our complex assemblies division;

 

· Our medical sites have been assigned "essential business" status in the US and Mexico, and our other sites are similarly deemed essential manufacturing locations by respective governments in the countries in which they operate. As of 16 April 2020, all Volex sites are operational.

 

  Nat Rothschild, Executive Chairman of Volex, commented:

 

" The worldwide COVID-19 pandemic is forcing governments to implement extreme, restrictive measures in an attempt to curb the spread of the virus. Our priorities are first and foremost: to safeguard the health and safety of our employees and our local communities; where possible to support government actions to slow the spread of COVID-19; and to assess and mitigate the risks to our business continuity.

 

However, despite this 'perfect storm', Volex's business has proved remarkably resilient, continuing to produce a solid performance in both sales and operating margins. Our strategy to diversify our products, customers and geographic footprint, together with our exposure to medical devices (and high-speed data centre products, which are in even greater demand as much of the world's population works from home), has resulted in continued growth and strong cash generation, despite significant headwinds.

 

In order to mitigate any unforeseen financial impact should the macroeconomic outlook deteriorate further, the group is taking steps to optimise cash flow. However, we have today announced a recommended final dividend of 2 pence per share, which reflects our robust financial position. 

 

We are closely monitoring all available forms of relief from governments on direct and indirect taxes, social charges, and employee relief funds, and assessing their relevance to Volex.   Current headroom under our existing facility, combined with our cash balances, provides the group with circa  $60 million of liquidity and, in line with our strategy, our team continues to actively look for new opportunities to grow our business and technical capabilities.

 

Operationally, there remain substantial identifiable opportunities for both divisions to improve sales and margin performance through disciplined execution of our strategy, in both the short and longer term. While the duration and impact of the COVID-19 virus remains uncertain, we remain confident that Volex will continue to progress in the year ahead.

 

We thank all of our customers, suppliers and employees for their dedication and commitment at this difficult time."

 

This announcement, released by Volex plc, contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

 

For further information please contact :

 

Volex plc

+44 7909 995 887

Nat Rothschild, Executive Chairman

 

Daren Morris, Chief Financial Officer and Company Secretary

 

 

N+1 Singer - Nominated Adviser & Joint Broker

+44 20 7496 3000

Shaun Dobson

 

Iqra Amin

 

 

Whitman Howard - Joint Broker

+44 20 7659 1234

Hugh Rich

 

Nick Lovering

 

 


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