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Key Points
- Volex reported revenues exceeding $510 million for the first half of FY2024.
- The company achieved a 9.7% organic revenue growth, driven by strong Electric Vehicle sales and a return to growth in Consumer Electricals.
- Operating profit margins are expected to remain within the Board's target of 9-10%, supporting continued investment in capacity and productivity improvements.
Volex (LSE:VLX), a specialist integrated manufacturer of critical power and data transmission products, has released a trading update for the 26 weeks ending 29 September 2024, showcasing impressive financial performance and sustained momentum despite challenging market conditions.
Financial Highlights
The company reported revenues exceeding $510 million for the first half of the fiscal year, indicating strong resilience and robust relationships with blue-chip customers across five key end-market sectors. This performance aligns with Volex's expectations, reinforcing its position in the industry.
In terms of organic revenue growth, Volex achieved 9.7% growth in constant currency. This increase was driven primarily by substantial gains in Electric Vehicle (EV) revenues, as well as a return to growth in the Consumer Electricals sector. Despite a slight decrease in Medical revenues—which was anticipated due to a strong prior-year comparison benefiting from post-Covid supply chain recoveries—other sectors performed well.
The Complex Industrial Technology segment reported good growth, buoyed by a significant rise in high-speed data center products, which helped to offset softer demand from industrial customers. Additionally, the Off-Highway sector experienced broad growth across a diverse customer base, further contributing to the overall performance.
Margin Resilience and Investment Strategy
Volex expects to deliver operating profit margins for the first half that remain consistent with the Board's through-cycle target of 9-10%, despite facing inflationary pressures, particularly in Turkey. This margin resilience demonstrates the company's ability to navigate economic challenges while maintaining profitability.
The strong performance has instilled confidence in Volex's strategic decision to continue investing in capacity and capability growth. As highlighted in previous full-year results, the company is accelerating productivity improvement initiatives as part of its integration program with Murat Ticaret, effectively mitigating localized labor cost pressures.
Positive Outlook
Volex's strong growth trajectory in the first half is a testament to its robust positioning in specialist markets that deliver critical connectivity solutions for customers. The company is capitalizing on a diversification strategy that targets structural growth markets, leveraging established relationships with key customers to ensure continued success.
Looking ahead, Volex is well-prepared to maintain its momentum throughout the second half of the fiscal year. Full-year expectations remain unchanged, reflecting the company's confidence in its operational strategy and market positioning.
The group is set to release its interim results on 15 November 2024, which will provide further insights into its performance and strategic direction.
