Volex Plc · LSE:VLX
Volex — H1 FY2010 Earnings Presentation
28 slides from Volex's earnings presentation, November 2009
Slide 1: Results for the half year ended 4 October 2009
Results for the half year ended 4 October 2009 Presentations – 3 and 4 November 2009 1
Slide 2: Contents
Contents 1. Key Points 2. Market Trends 3. Business Overview 4. Financial Highlights 2
Slide 3: Key Points
Key Points 1. Revenues down year on year in line with industry, but up quarter on quarter 2. Profits increasing through higher margin business, lower commodity prices and tight cost control 3. Strong cash generation with net debt reducing 4. New market focused sales organisation delivering 5. Transf
Slide 4: CEO statement on strategy and progress
When Volex started the new financial year we set forth a clear and measurable strategy to drive revenues and improve margins. This is to be achieved through i) a market sector focused Global Sales and Marketing organisation, ii) implementing efficiency through improved information technology and pro
Slide 5: Market Overview
Market Overview ; Volex
Slide 6: Relative competitive performance
Relative competitive performance Volex has suffered smaller revenue declines than it peers, and is the only company to report improvements in operating profits Reported Revenues Volex Amphenol -18% -18% Molex -27% Leoni Tyco Volex -41% -41% +48% Reported Adjusted Amphenol Operating -29% Profits Leon
Slide 7: Performance by product line
Performance by product line • Both divisions have experienced the same year on year revenue declines, underpinning that the major driver is the general economic situation • The Cable Assemblies industry generally has fallen 31.5% from US$12.4Bn to US$8.5Bn between 2008 and 20091 -17% -18% -18% Const
Slide 8: Significant regional variations
Significant regional variations • Volex’s regional performance reflects • respective end market demand • eastwards migration of our customer’s manufacturing • performance of individual customers in respective markets ASIA -2% AMERICAS TOTAL -17% -18% External revenues by destination - Year on year d
Slide 9: Sector Performance – Revenues
Sector Performance – Revenues 90 H1 FY09 80 H1 FY10 70 Revenues £m 60 50 40 30 20 10 0 Consumer Telecoms- Healthcare Industrial Datacoms • Consumer the main sector due to Power Cords - has suffered due to reduced consumer demand and OEM de-stocking • Telecoms-Datacoms down due to reduced/delayed net
Slide 10: Driving Volex Content & Margins
Driving Volex Content & Margins High Speed • Mini Displayport • CXP Cable Plugs Fiber Optic • Robust Optical Connector (ROC) • Robust Transceiver Connectors Radio Frequency • Remote Radio WCDMA • Low profile antennae Power Products • Halogen-free power cords • Power cord accessories 10
Slide 11: Business Overview
Business Overview ; Volex
Slide 12: At the full year we said we would….
At the full year we said we would…. Procurement, supply chain Marketing, sales and Skills, information, and manufacturing product development processes and systems • Exploit scale economies • Create sector focused • Develop people skills • Rationalise vendor base sales organisation • Upgrade IT infr
Slide 13: Procurement, supply chain and manufacturing
Procurement, supply chain and manufacturing 1. Reviewed Copper sourcing and consumption 2. Rationalising vendor base 3. Consolidating to single global freight partner 4. Re-engineering factory processes and layout 5. Re-aligned capacity to current demand levels 6. Improving quality control and assur
Slide 14: Marketing, sales and product development
Marketing, sales and product development 1. Healthcare piloting new sector sales organisation 2. Sales Incentive Plans rewarding sales and margins 3. Global bonuses incenting co-operation and cross-selling 4. Customers enjoying unified service and pricing 5. Substantial new business opportunities un
Slide 15: Skills, information, processes and systems
Skills, information, processes and systems • Paul Mather, new Human Resources Director • Andrew Ducker, new Marketing VP • Established Business Transformation Program Office • Moved Head Office from Warrington to London • New Corporate Performance Management system implemented • Intranet launched to
Slide 16: Cost reduction and operational leverage
Cost reduction and operational leverage During the first half Volex : • Reduced direct headcount across every factory location in order to maintain margins • Reduced indirect labour in all regions In addition a host of initiatives are already delivering or due to deliver reductions in non-labour cos
Slide 17: Financial Highlights
Financial Highlights 17
Slide 18: Summary Income Statement
Summary Income Statement £millions H1 FY10 H1 FY09 Revenue from continuing operations 110.2 133.9 Operating profit before non-recurring items 6.1 4.1 Non-recurring items (2.7) 0.1 Operating profit 3.5 4.2 Net finance costs (1.8) (1.4) Profit on ordinary activities before taxation 1.7 2.8 Taxation (0
Slide 19: Revenues trends
Revenues trends POWER PRODUCTS INTERCONNECT 80.3 80.3 60.9 70.4 53.6 53.6 66.5 50.4 56.8 55.9 43.7 Revenue £m Revenue £m 38.8 H1 FY09 H2 FY09 H1 FY10 H1 FY09 H2 FY09 H1 FY10 Reported Constant Currency • Reported PP and I/C revenues both declined around 18% year over year and by 29% on a constant cur
Slide 20: Gross margins trends
Gross margins trends 21.1 20.1 18.9 18.6 Gross Margin % 17.4 Power Products 16.2 Interconnect 14.8 Total 14.4 14.2 H1 FY09 H2 FY09 H1 FY10 • Gross profit margins are up significantly year over year in both PP and I/C • I/C margins flattened in H1 FY10 c.f. the preceding half while PP margins increas
Slide 21: Adjusted operating profits trends
Adjusted operating profits trends POWER PRODUCTS INTERCONNECT Adjusted Operating Profit £000 4,449 4,505 Adjusted Operating Profit 3,474 3,474 3,397 3,553 2,540 £000 1,501 1,678 1,299 656 656 H1 FY09 H2 FY09 H1 FY10 H1 FY09 H2 FY09 H1 FY10 Reported Constant Currency • Reported PP profits have recove
Slide 22: Cash flow and net debt
Cash flow and net debt £millions H1 FY09 H2 FY09 H1 FY10 Operating cashflow b/f non-recurring items and 3.1 5.1 5.2 working capital Cash utilised by non-recurring items (1.2) (3.4) (1.0) Decrease in working capital 5.1 8.6 3.7 Cash generated by operations 7.0 10.3 7.9 Tax and interest payments (0.9)
Slide 23: Outlook
Outlook 23
Slide 24: Outlook and prospects
Outlook and prospects • Trading environment continues to be challenging. • Revenues and adjusted operating profit in the second half of the year expected to be slightly higher than in the first half. 24
Slide 25: Contact Details
Contact Details CEO Ray Walsh +44 7775 602 577 ray.walsh@volex.com CFO Andrew Cherry +44 780 123 3366 andrew.cherry@volex.com London Stock Exchange code : VLX New London Address 10 Eastbourne Terrace Paddington London W2 6LG England 25
Slide 26: Appendices
Appendices ; 6 Volex
Slide 27: Liquidity
FTSE All Share Liquidity Requirement • The liquidity of the stock has increased with several renowned institutions increasing their holdings and we are hopeful of returning to the FTSE All Share Index in June 2010 0.23% 0.17% Liquidity 0.11% 0.06% Liquidity Test Threshold for admission to All Share
Slide 28: Share price performance
Share price performance Weighted Average (all figures in millions) Tyco Elect. Molex Amphenol Leoni Volex ex. Volex Last 12 month - Ended Date 29/07/09 30/06/09 30/09/09 30/609 05/04/09 Market Cap. (29.10.09) $10,160 $3,340 $7,080 € 372 £48 $21,131 Total Revenue $11,479 $2,582 $2,817 € 2,323 £265 $2