Volex plc · LSE:VLX
Volex — H1 2004/05 Earnings Presentation
31 slides from Volex's earnings presentation, November 2004
Slide 1: Interim Results November 2004
Volex Group p.l.c. Interim Results November 2004 TOTAL CABLE ASSEMBLY SOLUTIONS
Slide 2: Briefing Agenda
Briefing Agenda 1. Introduction Dom Molloy, Chairman 2. Results Overview John Corcoran, Group CEO 3. Financials Derek Walter, Group FD 4. Regional Review John Corcoran 5. Future View John Corcoran Volex Group p.l.c. Interim Results 2004/05 2
Slide 3: Financial Summary - H1 2004/05
Financial Summary - H1 2004/05 Turnover £123m Operating Profit* £1.2m Pre-tax loss** £(1.2)m Profit on disposal of properties £1.3m Net Debt £33m * pre goodwill amortisation and exceptional operating items ** pre exceptional operating items Volex Group p.l.c. Interim Results 2004/05 3
Slide 4: Key Features of H1
Key Features of H1 SALES: In line with budget expectations, improved performance across data, telecommunications and consumer products. Strong performance in Asia and Europe MARGIN: Commodity pricing effect (PVC and copper) impact margin by an estimated £4m on materials line. PROPERTY: Disposal of C
Slide 5: Trading Conditions
Trading Conditions Tele/Networking • Wireless demand continues to hold improving trend • Network degradation issues being addressed • Caution developing on 2005 outlook Computing • China deployment slower than expected • Fixed line business lacking momentum • PC unit sales lift, Dell, IBM expanding
Slide 6: Trading Conditions
Trading Conditions Consumer Products • Consumer demand holding but questionable • Copper price effect significant • Product migration to digital continues • Technology churn benefit on new design margin • Demand less seasonal • Appliance demand steady Automotive/Aerospace • Aerospace demand returns,
Slide 7: Group Sales by Destination
Group Sales by Destination Europe 2004/05 Percentage variation on prior H1 Americas Asia 15% 12.4% 9.2% 10% 5% 3.7% 28% 0% 31% 41% Volex Group p.l.c. Interim Results 2004/05 7
Slide 8: Group Sales by Product
Group Sales by Product Data/Telecommunications 2004/05 Percentage variation on prior H1 Power Cords Harnesses 13.5% 15% 10% 6.7% 5% 0% 11% -1.3% -5% 46% 43% Volex Group p.l.c. Interim Results 2004/05 8
Slide 9: Group Sales by Market Sector
Group Sales by Market Sector Data/Telecommunications 2004/05 Percentage variation on prior H1 Consumer Appliances Consumer Electronics 20% 16.8% Vehicles & Aerospace 15% 9.4% 10% 5.1% 5% 0% -5% -0.8% 11% 19% 50% 20% Volex Group p.l.c. Interim Results 2004/05 9
Slide 10: Financial Highlights
Volex Group p.l.c. Financial Highlights
Slide 11: Financial Highlights for the Half Year to October 2004
Financial Highlights for the Half Year to 3 October 2004 H1 H1 H2 2005 2004 2004 £m £m £m Sales 122.9 113.1 125.3 Operating Profit/(Loss)* 1.2 (0.7) 3.2 Pre-Tax Loss* (1.2) (2.7) 1.3 * before goodwill amortisation & impairment and exceptionals (operational and FRS3) Volex Group p.l.c. Interim Result
Slide 12: Turnover (inc 53 weeks)
Turnover (inc 53 weeks) 125.5 122.9 125 113.1 120 109.9 115 £M 110 105 100 02/03 H2 03/04 H1 03/04 H2 04/05 H1 Volex Group p.l.c. Interim Results 2004/05 12
Slide 13: Turnover
Turnover 122.9 120.9 * 125 113.1 120 109.9 115 £M 110 105 100 02/03 H2 03/04 H1 03/04 H2 04/05 H1 * - Second half turnover normalised to 26 weeks (FY2004 was a 53 week year) Volex Group p.l.c. Interim Results 2004/05 13
Slide 14: Operating Profits
Operating Profits* Op Profit* 4 £3.2m 2 £1.2m Op Profit (£m) 0 £(0.7)m -2 -4 03/04 H1 03/04 H2 04/05 H1 H1 2004/05 Key Features + European transfer - Commodity prices + Reduced NA loss (RDC change) - Tijuana fire * - Operating Profit pre goodwill amortisation, impairment and exceptionals Volex Group
Slide 15: Group Gross Sales by source
Group Gross Sales by source Europe 2004/05 Percentage change on prior H1 Americas 15% 12.6% Asia 11.5% 10% 5% 39% 0.4% 0% 31% 30% Volex Group p.l.c. Interim Results 2004/05 15
Slide 16: Taxation
Taxation Group Tax charge: 2003/04 Full Year charge £2.9m 2004/05 Half Year charge £1.1m The half year tax charge of £1.1m has arisen on a group break even result, representing the tax burden incurred by those operations making profits in the period. Effective Tax Rates Countries Up to 15% Ireland 1
Slide 17: Cash Flow
Cash Flow £m Net Cash Outflow from Operating Activities: Operating Profit (pre goodwill amortisation) 1.2 Depreciation 2.5 Working Capital (4.4) Free Cashflow (0.7) Proceeds net of capex 2.8 Operating Cashflow 2.1 Volex Group p.l.c. Interim Results 2004/05 17
Slide 18: Cash Flow cont/d
Cash Flow cont/d £m Operating Cashflow 2.1 Tax paid (0.4) Interest paid (net) (1.9) Refinancing costs (0.6) Issue costs amort’n (0.2) Exchange (0.5) Increase in Net Debt (1.5) Opening Net Debt (31.6) Closing Net Debt (33.1) Volex Group p.l.c. Interim Results 2004/05 18
Slide 19: Operations Review
Volex Group p.l.c. Operations Review
Slide 20: Volex Global Footprint
Volex Global Footprint Regional Centres, Manufacturing, Support units 1,895 2,246 5,452 Group HQ 161 3 Regional Centres 21 Manufacturing units 10 Engineering/sales/logistic support units Volex Group p.l.c. Interim Results 2004/05 20
Slide 21: Group Developments
Group Developments Transition effected to new Group F.D. Group Account penetration with Philips, Flextronics, Siemens Group Strategic Purchasing team on track to savings excluding external copper effect North America Management Change Tijuana fire recovery to plan - distractive effect on region Vole
Slide 22: Volex in the Americas
Volex in the Americas Revenue improved by 10% (local currency) over prior year Market strengthening especially on consumer- related products Fire in Mexico - data/telecoms output impacted Migration of OEM business Volex Asia, acceleration Profiling of US and Canadian sites to Engineering/Service loc
Slide 23: Volex in Asia
Volex in Asia Sales improved by 13% over prior year 2% margin effect of copper price increase Telecom infrastructure investments constrained Power cord sales strong on consumer electronics New product designs represent 15% of power cord sales Capacity increased in S. China, Indonesia Industrial mark
Slide 24: Volex in Europe
Volex in Europe Sales (excl. UK) up 18% on comparable period – 1H 03/04 Growth in infocom with wireless; European fulfilment of global contracts Transfers from Ireland to Croatia/Poland complete - facility disposal profit Power cord unit aligned into Volex Asia improving revenue and margin Vehicle H
Slide 25: The Future
Volex Group p.l.c. The Future
Slide 26: 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 27: Defining Cable Assembly Solutions
Defining Cable Assembly Solutions Total Product Supply Services Cable Portfolio Management Total Solution Services Approved Vendor List Control Provider Outsource/In-source Management Portfolio NPI Product/Solution Applications Rationalisation Management Design Value Add Services Hubbing/ JIT-to-Lin
Slide 28: Breadth of Segment Coverage
Breadth of Segment Coverage.... Consumer - Base Stations - Computers Telecom - Antenna products - Imaging/Printing - Switching devices - Audio/Stereo equipment - Transmission devices - Domestic appliances - Broadband devices - Garden & DIY tools Industrial Datacom - Servers - Automation - Storage -
Slide 29: Breadth of Technology Coverage
Breadth of Technology Coverage.... Power Products Industry Standard Medical Harnesses Fibre Radio High Optics Frequency Speed Volex Group p.l.c. Interim Results 2004/05 29
Slide 30: 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 31: Outlook
Outlook............. Demand improving environment expected to decline slightly in calendar 2005 And….. Oil prices continue to pressure global economy, and PVC prices Copper purchases under pressure and rising Regional improvement in N. America affected by Tijuana incident So…. Expect single digit sa
Volex Group p.l.c. — H1 2004/05 Earnings Presentation on 6ix