Volex Plc · LSE:VLX
Volex — Investor Presentation (January 2023)
22 slides from Volex's investor presentation, Jan 18, 2023
Slide 1: Consumer Electricals - Turkey Factory Visit
CONSUMER ELECTRICALS TURKEY FACTORY VISIT 18 January 2023
Slide 2: Introduction
Introduction Segments Customers Geography Diverse exposure to Partnering blue-chip Unmatched geographical variety of verticals global manufacturers reach and capability Revenue Margin Strategy Competitive positioning Market-leading margins Clear approach to is growing market share through efficiency
Slide 3: Overview
Overview 100+ 3 $262.4m 14% Years of Acquisitions FY22 Revenue FY22 Organic operation since Feb 2021 Revenue Growth 6,000 9 >200 Employees Production sites Customers 3 CONSUMER ELECTRICALS © Volex 2023
Slide 4: Leading global power cord manufacturer
Leading global power cord manufacturer Creating a compelling proposition for customers Why choose Volex? • Excellent reputation for quality • Competitive pricing • Global capability and customer service • World-wide safety certifications • Experts in specialist applications • Experienced in achievin
Slide 5: Global wire harness capability
Global wire harness capability Emerging challenger in an appealing market sector Wire harnesses are integral to a wide range of domestic appliances. Volex has significant experience in these products through the acquisitions of DEKA and Prodamex, in addition to existing capability in Batam. There ar
Slide 6: Sectors
Sectors Domestic appliances IT and electronics Industrial and tools • Washing machines • Laptops • Home automation • Refrigeration • Printers • Power tools • Air conditioning • Desktop computers • Pumps • Coffee makers • Networking • Power supply • Hobs and ovens • Office equipment • Vacuum cleaners
Slide 7: Domestic appliances
Domestic appliances Diverse market that includes wire harnesses and power cords for large and small white goods. Acquisitions in Turkey and Mexico have enhanced the global footprint which is particularly important for larger appliances which are manufactured close to end markets. Customer dynamics E
Slide 8: IT equipment and electronics
IT equipment and electronics Volex has long-established relationships with a broad range of global electronics manufacturers. The power cord is a small proportion of the overall product cost, but it is vital to ensure that the end product operates as expected. Customer dynamics End market trends • S
Slide 9: Industrial and other
Industrial and other This segment includes a number of different customers who use our products in commercial, industrial, medical and domestic settings. These products include pumps, power tools, home automation, business-grade power supply solutions and medical devices. Customer dynamics End marke
Slide 10: Global capability
Global capability Customer location Production 64% 40% 32% 28% 31% 5% North Asia Europe North Asia Europe America (inc Turkey) America (inc Turkey) Based on FY2022 revenue. Customer location based on where the primary customer relationship is maintained. Production is based on manufacturing location
Slide 11: Supply chain requirements
Supply chain requirements Bought in parts Manufactured parts End products Custom PVC granules Standard PVC granules Power cords Upstream Copper rod PVC cable for majority of Pins and bridges power cord applications Speciality cable Wire harnesses Connectors End products Distribution Customer Downstr
Slide 12: Global Consumer Electricals capability
Power cords Global Consumer Electricals capability Wire harness Cable extrusion Europe 2 production sites Asia 600 people 5 production sites North America 4,500 people 2 production sites 400 people India 1 production site 500 people 12 CONSUMER ELECTRICALS © Volex 2023
Slide 13: Creating strength and depth in our Consumer Electricals business
Creating strength and depth in our Consumer Electricals business Profitable growth (2021 onwards) • Highly cost competitive Transformation • Vertically integrated and automated (2017-2021) • Diversified customer base • Exited low margin business • Global footprint • Diversified customer base High gr
Slide 14: Acquisitions have enhanced our Consumer Electricals business
Acquisitions have enhanced our Consumer Electricals business Competitive Best customers Global capability manufacturing • Gained new customers • Enhancing global footprint • Delivered vertical integration • Achieved cross-selling success • Created localisation opportunities • Enhanced supply chain s
Slide 15: DE-KA was an excellent acquisition that has enhanced the Group
DE-KA was an excellent acquisition that has enhanced the Group Competitive Best customers Global capability manufacturing • Relationships with major European • Created immediate scale in Europe • Best in class automation and white goods manufacturers • Enhanced geographic and sector vertical integra
Slide 16: Economic context in Turkey
Economic context in Turkey Manufacturing expertise • Home to major domestic appliance manufacturing businesses Skilled workforce • Excellent availability of skilled employees and a dynamic labour market Exchange rate and currency movements • Significant devaluation of currency in recent years mitiga
Slide 17: DE-KA acquisition structure
DE-KA acquisition structure 17 Deal structure Performance against earnout Day one (Feb 2021): Earnout based on EUR EBITDA achievement €37m cash at closing and €2m deferred payment against a stretching growth target 3.3m Volex shares Earnout: Year one earnout: Exceeded €13m contingent earnout in cash
Slide 18: Strategic opportunities
Strategic opportunities Cross selling • Acquisitions have created new customer relationships and we are actively selling our capabilities to new and existing customers Localisation • Customers are looking to reduce supply chain complexity, creating opportunities to leverage Volex’s extensive manufac
Slide 19: Managing effectively
Managing effectively Copper pass-through • Absolute margins are protected by copper pass-through clauses in the majority of contracts or through hedging agreements with customers Inflation • Regular repricing allows inflationary cost pressures to be dealt with on a timely basis, with majority of con
Slide 20: Competitive advantages
Competitive advantages Best cost manufacturer • Able to win business and gain market share through competitive pricing while still achieving margin targets due to our investment in vertical integration and automation Global footprint • Have capacity and capability in the right locations to match wit
Slide 21: Continuing to deliver progress
Continuing to deliver progress Targeted investment to deliver growth and efficiency • Capital investment requirements are relatively modest, with a focus on supporting new customer projects with tooling, delivering targeted automation and driving further process efficiencies Continuous improvement c
Slide 22: Volex
Volex