Shares in Volex (VLX) rose 5 per cent after the power and data cabling provider booked its first pre-tax profit since the first half of 2013. Tight cost control was to thank for the improvement, as the elimination of bonuses, reductions in travel and professional fees and the restructuring of the group's London headquarters helped bring underlying operating expenses down 21 per cent to $27.4m (£18m).
That delivered profit growth despite an 11 per cent plunge in group revenue (after factoring in the shorter trading period of 26 weeks). Turnover at Volex's core power division sunk 14 per cent as both the global PC market and tablet sales tailed off. The resulting pricing pressures were further compounded by customers demanding that the benefits of a low copper price be passed on. Divisional profits also came under fire from wage inflation in China. Meanwhile, adjusted turnover at Volex's smaller data division dropped 6 per cent as customers in the US, Brazil and Russia responded to weakening economies by scaling back investments in mobile broadband networks.
Prior to these results, broker finnCap expected adjusted pre-tax profit of $11.1m for the year to March 2016, giving EPS of 9.2¢ (from $6.2m and 2.8¢ in FY2015).
| VOLEX (VLX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 56p | MARKET VALUE: | £51m | |
| TOUCH: | 56-57p | 12-MONTH HIGH: | 89p | LOW: 53p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 59¢ | NET DEBT: | 10% | |
| Half-year to 4 Oct | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 221 | -5.8 | -8.6 | nil |
| 2015† | 189 | 3.0 | 1.1 | nil |
| % change | -14 | - | - | - |
†One week less of trading (26 weeks versus 27 weeks from the prior period) £1=$1.52 | ||||
