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Aim-traded electrical components manufacturer Volex is relatively unknown compared with its executive chair. Lord Nathaniel Rothschild, of European banking dynasty fame, joined the business in 2015 and has overseen a process of diversification into higher-growth areas such as electric vehicles (EVs) and data centres.
Progress was evident in Volex’s latest annual results, and shares rose 17 per cent on publication of a better than expected update on June 26. For the first time, adjusted operating profit was above $100mn (£73.5mn) and annual revenues exceeded $1bn. Investors also enjoyed some bullish management commentary suggesting US tariffs had not unduly affected the business.
Sharon Molloy, wife of chief operating officer John Molloy, took advantage of the higher share price when she sold £1.2mn-worth of shares on July 2 and 3, a move which reduced her shareholding to zero. John Molloy owns 1.1 per cent of the issued share capital.
Volex’s annual revenue growth was driven by EVs, where organic growth rose 40 per cent, although this was flattered by previous year figures hit by destocking. The business was once dominated by power cords, but EVs are now part of its much more diversified operations. The company’s complex industrial technology unit — which includes data centre products — delivered organic growth of 15 per cent.
The company’s appetite for dealmaking is evident from the roughly $400mn spent on M&A since 2018. Bigger transactions are a possibility, as indicated by a failed £250mn approach last year for TT Electronics. While Volex’s leverage has climbed, it isn’t unmanageable.
Looking ahead, a revenue target of $1.2bn by 2027 is certainly achievable, while the operating margin already sits in the 9-10 per cent target range. Margins have been muted by weaker legacy assets, and higher-margin peers such as discoverIE are available, but progress has been notable in recent years.
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