Release Date: June 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Volex PLC (VLXGF, Financial) achieved over 11% organic growth despite challenging market conditions.
- The company exceeded $1 billion in revenue and $100 million in underlying operating profit for the first time.
- Volex PLC (VLXGF) maintained operating margins within the target range of 9% to 10% for five consecutive years.
- The integration of Murat Ticaret enhanced productivity and operational optimization, strengthening customer relationships.
- The company demonstrated strong growth in the electric vehicle segment with approximately 40% organic growth.
Negative Points
- The medical segment experienced a slight decline of approximately 5% year-on-year.
- Inflation, particularly in Turkey, posed a challenge, impacting labor costs and necessitating efficiency improvements.
- The company faced an adverse movement in working capital due to additional inventory requirements.
- Despite strong performance, the cash conversion rate was lower than the previous year due to working capital needs.
- Volex PLC (VLXGF) did not complete any acquisitions in FY25, focusing instead on integrating Murat Ticaret.
Q & A Highlights
Q: Have you seen any indications of customer order pull forward or stockpiling due to US tariffs?
A: Jonathan Boaden, Deputy Chief Financial Officer: We haven't observed significant changes in customer behavior related to tariffs. Our strong customer relationships and embedded position help us manage these challenges effectively.
Q: How much time do you allocate to Volex, given your other business interests?
A: Nathaniel Rothschild, Executive Chairman and CEO: I devote a considerable amount of time to Volex, focusing on high-level customer engagements, acquisitions, and strategy. I am particularly involved in the off-highway segment and leading the team.
Q: What are Volex's long-term financial targets and key metrics?
A: Jonathan Boaden, Deputy Chief Financial Officer: Our focus is on achieving $1.2 billion in revenue with 9% to 10% operating margins by FY27. We prioritize profitability, working capital management, and operational metrics like quality and customer service.
Q: How does Volex differentiate itself from competitors?
A: Jonathan Boaden, Deputy Chief Financial Officer: Our edge lies in engaging with customers at an engineering level, being cost-competitive, ensuring high quality, and providing excellent customer service, leading to deep customer relationships.
Q: What are your thoughts on acquisitions, particularly regarding TT Electronics?
A: Nathaniel Rothschild, Executive Chairman and CEO: We are valuation-conscious and focus on businesses with high customer concentration to reduce acquisition multiples. We have interesting deals in the pipeline but remain disciplined in our approach.
Q: How is Murat Ticaret affected by economic turbulence in Turkey?
A: Jonathan Boaden, Deputy Chief Financial Officer: We are addressing labor cost inflation through efficiency programs, including reducing headcount by 500. We continue to optimize operations to manage inflationary impacts.
Q: Do you see other sectors for Volex to expand into, such as defense or the Indian market?
A: Nathaniel Rothschild, Executive Chairman and CEO: We are already involved in defense and see opportunities there. The Indian market is a fast-growing sector, and we have a strong presence with plans to expand further.
Q: How is Volex supporting smaller companies like AFC?
A: Nathaniel Rothschild, Executive Chairman and CEO: We support smaller companies with growth potential, like AFC, by providing manufacturing solutions. This approach helps us win significant business as these companies grow.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
