Volex Plc · LSE:VLX
Volex — H1 FY2017 Earnings Presentation
14 slides from Volex's earnings presentation, November 2016
Slide 1: Volex – Interim Results 2016/17
Volex – Interim Results 2016/17 Nat Rothschild, CEO Daren Morris, CFO November 2016
Slide 2: Summary of H1 Results
Summary of H1 Results • Consolidated revenue fell 12% to $166million (10% excluding Cu price reduc<on / FX negligible) • H1 sales stable at 7% below H2 2016 level – EBIT margin up from 2.2% to 2.6% • Pre-excep<onal opera<ng profits at $4.3million despite fall in sales, driven by cost reduc<on in powe
Slide 3: Strategy for FY17 and beyond
Strategy for FY17 and beyond • Renew group inventory target of $35million by year end • Introduce lean-manufacturing mentality into all sites. We are advanced in Tijuana and are implemen<ng at our major power sites • Complete JEMS JV to reduce our raw material costs (first safety approvals expected i
Slide 4: Financial Review
Financial Review
Slide 5: H1 Revenue Performance
H1 Revenue Performance Powercord – HY2016 to HY2017 Cable Assemblies – HY2016 to HY2017 -15% -9% -9% -6% -21% -11% H1-2015/16 H1-2016/17 H1-2015/16 H1-2016/17 Other Customers Top 3 Customers Other Customers Top 3 Customers • Sales fell from $117 to $100 million • Sales decreased from $72 to $66 mill
Slide 6: Revenue Progression
Revenue Progression Quarterly Revenue - $m Average Weekly Revenue - $m/wk 4.1 4.2 3.9 3.7 3.5 3.6 3.6 3.6 2.8 2.8 2.7 2.6 Q1 FY16 Q2 Q3 Q4 Q1 FY16 Q2 Q1 FY16 Q2 Q3 Q4 Q1 FY16 Q2 Other Customers Top 3 Customers Top 3 Customers Other Customers • Revenue from our largest customer took a step-down in Q4
Slide 7: Financial Summary
Financial Summary $m FY15 FY16 H1-16 H1-17 • Sales decline due to lower end- market demand Revenue 423.4 367.5 189.4 166.1 Gross Profit 70.9 60.4 31.6 28.0 • Gross margin shows a slight increase - Gross Margin 16.7% 16.4% 16.7% 16.9% as lean ini<a<ves take effect and we exit lower margin business Oper
Slide 8: Exceptional Costs
Exceptional Costs $m H1-16 H2-16 H1-17 Impairment - 1.5 6.2 Restructuring Costs 1.2 1.5 1.6 Manufacturing Consultancy - - 0.6 Movement in Onerous Lease Provisions 0.1 1.0 0.3 Provision for Historic Tax Claims - -0.6 - ExcepIonal Costs 1.3 3.4 8.7 Impairment charge is non cash and relates to write-do
Slide 9: Divisional Profits
Divisional Profits $m H1-15 H1-16 H1-17 • Gross profit reduc<on as a Revenue direct result of reduced sales - Powercord 141.1 117.4 100.4 - Cable Assemblies 79.8 72.0 65.7 - Total 220.9 189.4 166.1 • A $3.6million decline in gross profit was countered by further Gross Profit* savings in opex - Powercor
Slide 10: Power Cords
Power Cords $m FY15 FY16 H1-16 H1-17 Change Revenue 273.7 230.2 117.4 100.4 -14.5% Gross Profit* 36.7 29.8 15.2 14.2 -6.6% Gross Margin* 13.4% 13.0% 12.9% 14.2% Opera<ng Costs 31.4 27.5 13.8 12.8 -7.5% OperaIng Profit* 5.4 2.3 1.4 1.5 7.1% Opera6ng Margin* 2.0% 1.0% 1.2% 1.5% *Underlying measure befor
Slide 11: Cable Assemblies
Cable Assemblies $m FY15 FY16 H1-16 H1-17 Change Revenue 149.7 137.3 72.0 65.7 -8.7% Gross Profit* 34.2 30.6 16.4 13.8 -15.9% Gross Margin* 22.8% 22.3% 22.8% 21.0% Opera<ng Costs 23.0 20.8 10.9 9.0 -17.4% OperaIng Profit* 11.2 9.8 5.5 4.8 -12.7% Opera6ng Margin* 7.5% 7.1% 7.6% 7.2% *Underlying measure
Slide 12: Cash Flow
Cash Flow $20 $15 $10 Cash Flow ($m) $5 5.2 $0 -$5 (3.2) -$10 -$15 FY16 Net Debt Cash generated Cash uIlised Interest and Capex Other H117 Net Cash from by non Tax operaIons recurring items • Focus on working capital management resul<ng in an $8.4m working capital inflow in H1 (+$1.7m stock, +$2.1m d
Slide 13: Balance Sheet
Balance Sheet $m FY16 H1-FY17 • PPE reduc<on reflects impairment Goodwill & Intangibles 3.7 3.2 of assets in Shenzhen and Brazil Property, Plant and Equipment 33.3 24.8 Other 2.4 1.8 Non-current Assets 39.4 29.8 • Inventory reduc<on remains our Inventories 41.5 40.0 focus into H2 Trade & other receiv
Slide 14: Outlook
Outlook • Current expecta<ons are that full year revenues will be in the range of $320 to $330m in FY17 (down from $340 to $360m indicated in June) • 2 large high-margin cable assembly customers underperforming • Our largest customer in powercord is experiencing reduced demand • Revenues from our la