Volex reiterates guidance after 'strong' first quarter

Power products and manufacturing services provider Volex said in a trading update on Friday that its first-quarter performance was “strong”, in line with management expectations and its new, five-year growth plan.

The AIM-traded firm, which was holding its annual general meeting, said revenue grew by 4.9% organically, which it put down to positive customer demand and its ability to deliver in a “challenging” supply chain environment.

As it outlined in its full-year results in June, Volex said it was continuing to maintain high levels of utilisation across each region, with higher inventory levels than the previous year to support the timely delivery of complex products to customers.

Integration of the acquisitions made during the 2022 financial year was progressing well, with the company still developing a “strong” acquisition pipeline.

“The company's diverse end markets continue to support Volex's long-term strategic plans and afford the group a high degree of resilience,” the Volex board said.

In electric vehicles, it reported continued revenue growth resulting from its investment to enhance capabilities and enable it to support a range of products for customers, while in consumer electricals, revenues were continuing to grow, reflecting an increasing market share through selling activity, as well as the delivery of new customer projects.

Demand from medical customers, meanwhile, was still “robust”, and revenues were ahead of the previous year despite challenges due to the limited availability of components, while in complex industrial technology, demand in the firm’s core business remained strong, and “next-generation” high-speed cable volumes were expected to increase as customers accelerated their technology replacement programmes.

“Management continues to focus on diversification, vertical integration and realising cross-selling opportunities across the business in order to deliver sustainable revenue growth,” the directors of Volex said of the company’s outlook.

“Overall, whilst still early in the year, the encouraging trends in the first quarter mean the board expects to deliver full year underlying operating profit in line with current market expectations.”

At 1117 BST, shares in Volex were down 3.37% at 302.45p.

Reporting by Josh White at Sharecast.com.