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Volex Slides Despite Record Half-Year Profit

Volex reported record first-half revenue and underlying profit ahead of Peel Hunt's forecasts, yet the shares fell in London today as the second-half guide and data-centre comparison came into focus.

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Shares of Volex PLC (LON: VLX) are up 12.5% this year

Volex (LON: VLX) shares fell about 6.9% in London today despite record half-year results that beat a broker’s forecasts. The maker of power and data cables for data centres, electric vehicles and medical devices reported revenue of $723.6m and underlying operating profit of $80.6m.

The FTSE 250 stock opened at 561p against a previous close of 567p and hit a low of 522p. It was at 528p at about 1.10pm, a delayed intraday quote rather than a close, on 1.63m shares traded, already above its recent daily range of roughly 0.6m to 1.2m.

That leaves the shares about 25.6% below the 710p high of the 26th of May. They also fell about 11.6% on the 19th of October.

VLX.LSE

Revenue rose 23.9% from $583.9m a year earlier. Underlying operating profit, which excludes one-offs and share-based pay, rose 40.9% from $57.2m, lifting the margin to 11.1% from 9.8%. Broker Peel Hunt had forecast $718m and $78.4m, Proactive Investors reported.

Chief Executive Officer Nat Rothschild said:

This was another record first half for Volex. We grew in all five of our end-markets and increased underlying operating profit by 41%, delivering margins above 11% for the first time.

Nat Rothschild, Chief Executive Officer, Volex

The outlook appeared to be weighing. About $10m of first-half revenue was brought forward from the second half, and second-half revenue is expected to be broadly in line with the first half excluding it.

Data centre revenue grew 47.0% organically year on year but was below the second half of last year, when component shortages elsewhere led customers to place extra short-term volumes with Volex that did not repeat.

Line chart of Volex share price over 12 months rising to a May peak, sliding since October and falling again on results day.
Volex share price over 12 months: a May peak of 710p, a slide since October and a fall on results day. Today’s point is an intraday quote at time of writing, not a close.

The company said the second half “has started well” and that full-year expectations, as upgraded in October, are unchanged. Peel Hunt has a buy rating and an 800p target, about 52% above 528p, and says investor attention is on Complex Industrial, the division covering data centres.

A year ago the reaction was the reverse: on last year’s half-year results day the shares rose from 372.5p to a close of 422p.

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