Volex Plc · LSE:VLX
Volex — FY2017 Earnings Presentation
18 slides from Volex's earnings presentation, Jun 8, 2017
Slide 1: 2016/17 Preliminary Results
2016/17 Preliminary Results 8 June 2017 Nat Rothschild Daren Morris 1
Slide 2: Volex is bringing power and connectivity
Volex is bringing power and connectivity to equipment that is changing how we work and live!
Slide 3: Disclaimer
Disclaimer This Presenta,on does not cons,tute or form part of any offer or invita,on to sell or issue, or any solicita,on of any offer to purchase or subscribe for, any securi,es to any person in any jurisdic,on to whom or in which such offer or solicita,on is unlawful, nor shall it (or any part of it
Slide 4: Introduction
Introduc2on • A year of massive cultural change within the organiza2on, to create a best in class team • Intense efforts to right-size our business foot-print, improve our cost-compe22veness and begin to diversify our customer-base • Volex is ungeared at the year-end, and ready for growth • Our strat
Slide 5: Summary of FY17 Results
Summary of FY17 Results • Strategy to reduce unprofitable ac2vi2es resulted in a 13% sales reduc2on, however • gross margin improved from 16.4% to 17.4% • on going opera2ng expenses reduced by 13% from $53.2million to $46.4million • As a result, pre excep2onal opera2ng profit increased by 26% to $9.1m
Slide 6: Revenue Progression
Revenue Progression Volex Sales - last 3 years • The top 3 customers as a propor2on of the total sales has reduced: from 47% in FY15 to 40% in FY17 450.0 • Total sales decreased by 13% in FY17 as we 400.0 executed our strategy to exit loss-making 350.0 business and to improve return on capital 300.0
Slide 7: Main activities in FY17
Main ac2vi2es in FY17 • Structural Cost Reduc0on Ac0vi0es • Shrunk Shenzhen facility into 2 buildings (from 4) to cope with decline in revenue from our largest customer • Closure of loss-making Brazil factory • Reduced office and hub footprint / exit onerous leases • Lean Implementa0on • Complete ac2o
Slide 8: Opportunities for Volex in the medium term
Opportuni2es for Volex in the medium term FY18 is all about Execu0on in our Sales and Opera0ons • Sourcing 1 – there is an opportunity to beger leverage our global sourcing spend, and a new China based global head of sourcing starts in August • Sourcing 2 – JV cable company is poised to win safety a
Slide 9: Financial Summary
Financial Summary $m FY16 FY17 Change • Gross margins have improved due Revenue 367.5 319.6 -13.0% to factory ra2onalisa2on, improved efficiency, elimina2on of loss- Gross Profit 60.4 55.5 -8.1% making sales and procurement - Gross Margin 16.4% 17.4% efficiencies Operating Costs (53.2) (46.4) • Con2nued
Slide 10: Exceptional Costs
Excep2onal Costs $m FY16 FY17 Impairment/Product portfolio realignment 1.5 12.5 Restructuring costs 2.7 1.6 Manufacturing optimisation consultancy - 0.8 Movement in onerous lease provision 1.1 0.3 Provision for historic sales tax claims -0.6 - Total non-recurring items 4.7 15.2 Cash impact of Except
Slide 11: Cable Assemblies
Cable Assemblies $m FY16 FY17 Change Revenue 137.3 131.3 -4.4% Gross Profit* 30.6 27.9 Gross Margin* 22.3% 21.2% Operating Costs (20.8) (17.4) Operating Profit* 9.8 10.5 7.1% Operating Margin* 7.2% 8.0% * Underlying measure before Share Based Payments and Exceptional Items • Sales declined due to en
Slide 12: Power Cords
Power Cords $m FY16 FY17 Change Revenue 230.2 188.3 -18.2% Gross Profit* 29.8 27.5 Gross Margin* 12.9% 14.6% Operating Costs (27.5) (24.3) Operating Profit* 2.3 3.2 39.1% Operating Margin* 1.0% 1.7% * Underlying measure before Share Based Payments and Exceptional Items • Reduc2on in sales mainly due
Slide 13: Cash Generation
Cash Genera2on $30 $25 $20 $15 Sales ($m) $10 $5 $0 -$5 FY16 Net Debt Cash Cash u0lised Interest and Capex Other FY17 Net Cash Generated by non Tax from recurring Opera0ons items Significant improvement in our year-end cash posi2on Lloyds and HSBC con2nue to support the group with a $30m revolving cr
Slide 14: Return on Capital
Return on Capital $m FY16 FY17 Goodwill & Intangibles 3.7 3.0 • As the revenue has declined, inventory Property, Plant and Equipment 33.3 18.1 and trade receivables have reduced, Other 2.4 3.8 genera2ng cash to reduce debt Non-current Assets 39.5 24.9 Inventories 41.5 36.0 • The business has generat
Slide 15: Outlook
Outlook • Current expecta2ons are that revenues will show a recovery in FY18 • Power Cord expected to show a small decline with improved margin • Cable Assemblies pipeline is encouraging • Gross margin % to be consolidated at FY17 levels • Opera2ng expenses should show a small reduc2on as full year
Slide 16: Additional Information
Additional Information
Slide 17: Our customers
Our customers Consumer Datacom Telecom Industrial Healthcare Transporta/on
Slide 18: 8 world class manufacturing sites
8 world class manufacturing sites Volex Heng Gang, Shenzhen – 1745pax Volex Zhongshan, Guangdong – 1388pax Volex Batam, Indonesia – 1200pax Volex de Mexico, Tijuana – 503pax Volex Chennai, India – 288pax Volex Hanoi, Vietnam – 283pax Volex Suzhou, China – 587pax Volex Poland, Bydgoszcz – 323pax