Volex plc · LSE:VLX
Volex — H1 2005/06 Earnings Presentation
27 slides from Volex's earnings presentation, November 2005
Slide 1: Interim Results 2005/06
Volex Group plc Interim Results 2005/06 November 2005 TOTAL CABLE ASSEMBLY SOLUTIONS
Slide 2: Briefing Agenda
Briefing Agenda 1. Introduction Martin May , Chairman 2. Results Overview John Corcoran, Group CEO 3. Financials Derek Walter, Group FD 4. Regional Review John Corcoran 5. Future View John Corcoran Interim Results 2005/06 Volex Group plc 2
Slide 3: Financial Summary - H1 2005/06
Financial Summary - H1 2005/06 1H LY Turnover £124.0m £123m Operating Profit* £1.4m £1.2m Equity Raising (June) £19.0m Finance Charges reduced £1.7m £2.5m Loss per share* 3.3p 7.8p * Pre major restructuring programme Interim Results 2005/06 Volex Group plc 3
Slide 4: Key Features of H1
Key Features of H1 SALES: In line with budget expectations, improved performance in North America. Strong sector performance in Consumer Products MARGIN: Commodity price (PVC and copper) impact continued. Gross margin held. FUNDING: Successful £19m equity fund raising, June Cash injection to effect
Slide 5: Trading Conditions
Trading Conditions Tele/Networking • Wireless demand continues to improve with exception of Europe • Mobile voice and data and broadband – focus on convergence at service level • 2006 outlook consensus for moderate growth • Emerging markets gaining momentum • Fixed line business flat to negative Com
Slide 6: Trading Conditions
Trading Conditions Consumer Products • Digital migration to plasma, LCD – price sensitive • Copper price effect significant – but equalising • Innovation differentiating at sub-assembly level • Technology churn benefit on new design margin • RoHS compliance key – environmental drive • Appliance dema
Slide 7: Group Sales by Destination
Group Sales by Destination Europe 2005/06 Percentage variation on prior H1 United Kingdom 10% 6.1% North America 5% 1.1% Asia 0.2% 0% -5% -10% -8.6% 29% 2005/06 Percentage variation on prior H2 26% 10% 6.5% 6.0% 3.0% 5% 0% 31% -5% 14% -10% -15% -20% -15.0% Interim Results 2005/06 Volex Group plc 7
Slide 8: Group Sales by Product
Group Sales by Product Data/Telecommunications 2005/06 Percentage variation on prior H1 Power Cords Harnesses 15% 10.5% 10% 5% 1.8% 0% -5% -2.8% 13% 45% 2005/06 Percentage variation on prior H2 42% 15% 10% 5% 2.7% 3.0% 0.5% 0% Interim Results 2005/06 Volex Group plc 8
Slide 9: Group Sales by Market Sector
Group Sales by Market Sector Data/Telecommunications 2005/06 Percentage variation on prior H1 Consumer Products Industrial & Medical 20% 14.1% 15% Vehicles & Aerospace 10% 6.1% 3.6% 5% 0% -5% -10% -7.3% 13% 2005/06 Percentage variation on prior H2 11% 36% 8.7% 10% 6.4% 5.3% 5% 0% 40% -5% -5.1% -10%
Slide 10: What's Different… Where we came from
What’s Different….. Where we came from… ¾ At end of 2004/05 - cash balances of £15.0m - gross debt of £45.5m - debt fully serviced throughout year ¾ However………….. the Group was cash constrained: - scheduled debt repayments (totalling £5m) deferred - substantial interest and debt arrangement fees in
Slide 11: What's Different… Where we are now
What’s Different….. Where we are now..… ¾ Reducing the manufacturing footprint and moving to lower cost locations ¾ Retain levels of capacity but closing 12 manufacturing sites 4 closed to date: Malaysia, Philippines, Conover (USA), Tczew (Poland), Kanata (Canada) significantly downsized ¾ Since hal
Slide 12: Financial Highlights
Volex Group plc Financial Highlights
Slide 13: Financial Highlights for the Half Year to October 2005
Financial Highlights for the Half Year to 2 October 2005 H1 H1 1 H2 1 2006 2005 2005 £m £m £m Sales 123.9 122.9 121.7 Operating profit 2 1.4 1.2 0.6 Major restructuring programme (1.8) 1.3 (8.0) Loss before tax 2 (0.2) (1.2) (1.3) Loss per share 2 (3.3) p (7.8) p (15.6) p 1 As restated for IFRS 2 Pr
Slide 14: Gross Sales by Source
Gross Sales by Source 2005/06 Percentage variation on prior H1 Europe United Kingdom 20% North America 10.6% 3.4% 3.8% Asia 0% -11.9% -20% 39% 2005/06 Percentage variation on prior H2 18% 20% 3.5% 4.4% 4.3% 0% 12% -8.6% 31% -20% Interim Results 2005/06 Volex Group plc 14
Slide 15: Balance Sheet
Balance Sheet 2 Oct 3 April 3 April 2005 2005 2005 IFRS IFRS UK GAAP £m £m £m Tangible fixed assets 13.2 13.4 13.6 Inventories 30.7 28.0 28.0 Receivables 55.2 50.4 50.4 Current liabilities (46.2) (40.9) (40.2) CAPITAL EMPLOYED 52.9 50.9 51.8 Provisions (7.5) (7.4) (4.2) Intangible assets 2.1 2.1 1.8
Slide 16: Operating Cash Flow
Operating Cash Flow H1 2006 FY 2005 Ongoing MRP Total Ongoing MRP Total £m £m £m £m £m £m Operating profit 1.4 (1.7) (0.3) 1.8 (6.8) (5.0) Amort., dep'n and impairment 2.0 - 2.0 4.5 3.3 7.8 Profit on disposal - - - - (1.9) (1.9) Working capital 0.1 (0.2) (0.1) (4.1) 1.4 (2.7) Provisions (0.3) 0.8 0.
Slide 17: Cash Flow
Cash Flow H1 FY 2006 2005 £m £m Ongoing operating cash flow 2.1 0.4 Tax paid (2.3) (2.2) Interest paid (1.4) (3.8) Ongoing cash flow (1.6) (5.6) Cash flows of major restructuring programme (1.1) 6.8 Issue of share capital 17.6 - Refinancing costs paid (2.4) (0.7) FX movement (2.0) 0.7 Movement in de
Slide 18: Operations Review
Volex Group plc Operations Review
Slide 19: Volex in North America
Volex in North America Revenue by source improved by 3.4% over 1H prior year Market strong in Q1, weakened somewhat in Q2 Closed Conover, downsizing Kanata and Fremont, announced closure of Aguascalientes Accelerated transfer of power cord production from Mexico to Asia Business restored close to br
Slide 20: Volex in Asia
Volex in Asia Sales flat, consumer electronics weak. Level of profitability improved Copper price increase of 20% over start of year Telecom and data business weak – have transitioned to North American team Power cord sales strong New product designs represent 10% of power cord sales Malaysia and Ph
Slide 21: Volex in Europe
Volex in Europe Sales by source (excl. UK) at 88% of comparable period – 1H 04/05 Some one-off projects last year not repeated 2 Poland sites consolidated – Tczew closed Operating profit margin ahead of expectations Vehicle Harness steady to slightly negative, low-cost solutions from China and Eston
Slide 22: The Future
Volex Group plc The Future
Slide 23: Our Strategy
Our Strategy To be the leading Value provider of Global cable assembly Solutions • Service • Quality • Design • Responsiveness • Development • Flexibility • Footprint • NPI • Independence • Account mgt. • Logistics • Product transfer • Portfolio mgt. • Low cost options • Supply base mgt. • Global te
Slide 24: Momentum Building..
Momentum Building.. ¾ Volex operates in a growing market whose demand is not significantly cyclical – competitiveness is key ¾ Potential for significant margin improvement – costs are being stripped out ¾ Revenues can be grown in a highly fragmented market place ¾ Post refinancing, the Group has a s
Slide 25: Maximising Customer Satisfaction
Defined Value Offering.... GLOBAL • Global service for a global customer base • Global cost solutions for a regional customer base PRODUCT PEOPLE Providing a one-stop Volex has the people: shop to service our • Account Management customers’ total product • Engineering requirements with a • SCM exper
Slide 26: Outlook
Outlook............. Demand holding for balance of year, further site closures planned for completion by year-end: but….. Oil prices continue to pressure global economy, and PVC prices to Volex Copper prices continue to rise, risk to Q4 Consumer spending levels questionable so….. Expect modest sales
Slide 27: Thank You
Volex Group plc Thank You