Volex Reaffirms Plan To Bring Back Dividend After Strong Profit Growth

(Alliance News) - Power and data cable firm Volex PLC reported strong profit growth in its ...

Alliance News 13 June, 2019 | 10:03AM
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(Alliance News) - Power and data cable firm Volex PLC reported strong profit growth in its recently ended financial year on Wednesday, with the company at its strongest "for many years".

For the 12 months to March 31, pretax profit climbed 66% to USD11.6 million, with underlying pretax profit more than doubling to USD20.2 million from USD9.7 million.

Revenue climbed 15% on the year before to USD372.1 million. Organic growth was 9%, with acquisitions made during the year performing solidly.

Volex is not paying a dividend for the year, but plans to reintroduce one when it releases interim results for its new financial year in November. It has not returned any cash to shareholders since its year ended March 2012.

"Over the past year we have continued to deliver on our stated strategy to refresh our customer base and grow our business with both new and existing customers," said Executive Chair Nat Rothschild.

"This has resulted in a significant increase in profitability at Volex, and our group is now in a much stronger position than it has been for many years."

One headwind during the year has been US import tariffs on Chinese goods, which meant Volex has moved some production outside of China. This has led, it said, to extra administrative and investment costs.

Volex has two divisions: Power Cords and Cable Assemblies. In the former, revenue fell 2.3% to GBP198.9 million, but Cable Assemblies grew 46% to GBP173.2 million, helped by three acquisitions.

Power Cords is operating in a "highly competitive" market, Volex said, and revenue was hit by a 43% reduction from its largest customer.

Operating profit in Power Cords was flat at USD11.5 million, but in Cable Assemblies it tripled to USD9.9 million.

Looking ahead, Rothschild said: "Volex's core markets are expected to remain highly competitive in the near term but we remain focused on improving our business and our performance. Both our divisions occupy market-leading positions and are well placed through their unique geographic footprint.

"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, and we expect to deliver further value to our shareholders in the year ahead. I remain excited about the company's prospects and our team continues to actively look for new opportunities to grow our business and technical capabilities."

Shares were 1.2% lower on Thursday morning at a price of 100.82 pence each.

By George Collard; georgecollard@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
Volex PLC 99.85 GBX -0.15 -
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