Volex wired for success as earning leap
ELECTRICAL cable firm Volex said today its aggressive cost cuts have helped spark an almost 200% hike in profits.
In a statement to the stock market, Volex said that the cuts, coupled with a strong US dollar, helped boost revenue in the 17 weeks to end of February by 17%, while operating profits were up 190%.
Revenue in its Interconnect business was up 48% to £13m as well as generating “significant” operating profit during the period.
Volex said it has abandoned plans to divest its Power Products division which reported flat sales over the period, adding that cost control combined with reducing commodities prices have allowed it to maintain operating margins in the division.
Chief executive Heejae Chae said Volex said significant improvements in working capital management had resulted in strong cash generation and working capital cash flow currently stands at £15m.
He added: “Given current global economic uncertainties, the board continues to take a prudent view of the market. However, with continuing strong performance in Interconnect coupled with aggressive cost management, combined with the favourable impact of lower commodity prices and the stronger US Dollar, it remains comfortable with the trading outlook for the current financial year.”
Last week the group announced it is selling its loss making wiring harness division to a management team, in a deal that will cost it as much as £850,000.
The Warrington-based manufacturer has agreed to sell Volex Wiring Systems to Ionix Holdings Limited, a management buyout vehicle for a nominal £1.
Although it has gross assets of £18.8m, the division reported an operating loss of £2m in the six months ended October 5, 2008, on revenues of £21.2m.
