Volex outlines plan to double revenue as EV success drives record profits

Francesca Morgan
Vox Newswires
11:28, 23rd June 2022

Volex (VLX) outlined a new five-year plan to double revenues as it reported record underlying pre-tax profit for the 52 weeks ended 3 April 2022 amid strong organic growth.

In FY22, Volex saw revenue increase by 38.6% to $614.6m, up from $443.3m in FY21 as all of its divisions and regions reported growth, including a near doubling of revenues in its Electric Vehicles business as it launched new products and picked up new customers, and a recovery in its medical division to pre-Covid levels as access to hospitals improved. 

The England-based electronic components maker reported a record underlying pretax profit of £36.2m in the year, up 23% from £29.4m a year earlier. Contributions from four acquisitions for a total consideration of $47.1m further supported the strong performance over the period. 

The strong figures prompted the manufacturing services provider to raise its final dividend by 9.1%.  The 2.4p full year payout takes the total for the year to 3.6p.

Volex said it has seen a strong start to the new financial year, with high levels of customer demand including strong orders for more complex products with longer lead times. The company outlined that it has adapted to the current and ongoing significant supply chain and inflationary challenges which have developed during FY22 and continues to monitor developments closely, "taking a proactive approach to addressing issues as they emerge."

“Having built a dynamic, resilient business with diverse capabilities and excellent customer relationships in attractive markets, we are well positioned to deliver on the tremendous potential of Volex's business and capitalise on the growth opportunities in our markets.”

Commenting on this morning’s results, Nat Rothschild, Volex's Executive Chairman noted: "Our record performance and revenue progression, demonstrated against the backdrop of a challenging manufacturing environment, is testament to what we have achieved.

"We continue to see significant opportunities across our market. The infrastructure and acquisition investments we have made in FY2022 are focused on our pursuit of further growth, capitalising on the leading position we have in attractive sectors. With an exciting acquisition pipeline and access to funding, we will continue this successful strategy.”

Looking ahead, Volex outlined to investors that its ambition is to double revenues to $1.2 billion by the end of FY27, including at least $200 million of revenue from new acquisitions. It aims to achieve this while maintaining its underlying operating profit margin within a range of 9-10%.

Rothschild says this underlines Volex’s confidence in the clear growth opportunities created by “excellent customer relationships, exceptional assets and an agile operating model." It also reiterated its commit to new product research and development, with plans to further expand its R&D team in FY23.

Despite lifting its payout to shareholders, the stock had its “not rated” rating reaffirmed by equities research analysts at Shore Capital. Analysts at Canaccord Genuity Group cut their target price on Volex from GBX 510 to GBX 440 but have maintained a “buy” rating on the stock.

Volex's shares have lost a third of their value this year, but at 234p now trade on a forecast PE ratio of just 11.3x. 

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