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Volex plc (AIM: VLX), a specialized manufacturer of critical power and data transmission products, has announced its preliminary financial results for the 52 weeks ended March 31, 2024 (FY24), highlighting robust revenue growth and strategic advancements.
Financial Performance
During FY2024, Volex achieved a significant 26.3% increase in group revenue, reaching $912.8 million compared to $722.8 million in FY2023. This growth was primarily driven by a strong organic performance, showcasing resilience despite temporary challenges related to customer destocking. The underlying operating margin also improved by 50 basis points to 9.8%, comfortably within the targeted range of 9-10%. The year-end net debt covenant leverage remained at a healthy 1.0x, with robust cash generation partially offsetting borrowings utilized for strategic acquisitions.
Dividend and Financing
Volex has proposed a final dividend of 2.8 pence per share, totaling 4.2 pence for the year, marking a 7.7% increase from the previous year. Post the fiscal year-end, the company successfully completed a refinancing initiative, securing $600 million of long-term debt facilities on improved terms. These facilities are strategically aimed at supporting future growth opportunities and strengthening financial flexibility.
Strategic Developments
Looking ahead, Volex is poised for continued growth and expansion across its key sectors. The company has made substantial progress in executing its five-year strategic plan, bolstered by a customer-focused investment program and strategic acquisitions. Improved demand from Electric Vehicles and Consumer Electricals sectors towards the end of FY2024 indicates a positive trajectory, with signs of reduced destocking impacts.
Outlook for FY2025
As Volex enters FY2025, the outlook remains optimistic with a focus on securing new projects globally. The company anticipates accelerated growth in the Off-Highway sector, particularly in North America, where it plans to launch a dedicated business unit. Investments in operational capabilities are set to double, supporting long-term growth initiatives. Capex for FY2025 is projected to be approximately 5% of revenue, underscoring Volex's commitment to expanding its manufacturing capabilities and enhancing operational efficiency.
