Everyone loves a comeback kid, and at Volex (VLX) you get two for the price of one. First, there’s the cable manufacturer itself, which was wrestling with falling sales and operating losses six years ago. Then there’s Nat Rothschild, who joined the group as a non-executive director in 2015, fresh from a fruitless attempt to create a new “international coal champion” in Indonesia. He’s now chairman and set on restoring the reputation of the group – as well as his own.
- Impressive margin growth
- Booming EV business
- Global reach
- Lowly valued
- Exposure to consumer spending
- Working capital outflows
Volex makes power cables for everything from kitchen appliances to electric cars for the likes of Tesla. In the past, the business has been hamstrung by the low-margin nature of its work and the precariousness of its contracts. The loss of a deal with Apple in 2012, for example, proved particularly painful. Over the past seven years, however, with the help of a new leadership team, the group has reinvented itself, embraced a wider product range and reduced the concentration of its customers. In 2014, half of revenues came from three clients. By 2020, this had fallen to a quarter.