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(Sharecast News) - Volex upgraded its full-year outlook on Wednesday, after strong second-half trading driven by robust demand for data centre products, and said it was considering a move to the Main Market of the London Stock Exchange.
The AIM-traded specialist manufacturer of power and data transmission products said results for the year ending 31 March were now expected to be significantly ahead of current market expectations.
Group revenue was forecast to be at least $1.22bn, while underlying operating margins were set to come in slightly above the top end of its 9% to 10% target range, supported by operating leverage and continued efficiency gains.
The outperformance was reportedly led by the Complex Industrial Technology division, where demand for high-speed data transmission products had been fuelled by data-intensive artificial intelligence applications.
Volex said full-year data centre revenues were expected to be approximately double the $118m reported in the prior year.
The group said it also benefited from fulfilling accelerated customer requirements, leveraging its global footprint to meet near-term capacity needs where competitors were unable to do so, although it cautioned that dynamic may not repeat at the same level in the 2027 financial year.
Other end markets, including electric vehicles, consumer electricals, medical and off-highway, traded broadly in line with the first half, providing a stable contribution and supporting the group's diversified revenue base.
Volex added that it had limited direct exposure to markets most affected by current geopolitical tensions in the Middle East and did not expect a material impact on its operations or near-term outlook.
Separately, the company said its board was considering transferring its listing from AIM to the Main Market, citing its growth in revenue, profitability and market capitalisation since joining AIM in 2018.
The board said it believed a move would improve access to deeper pools of capital, broaden its investor base and enhance share liquidity, while also raising the group's corporate profile with global customers.
It said an update would follow consultations with major shareholders.
Volex said it would host a capital markets event for institutional investors and analysts on 22 April in London, where it would outline new medium-term growth targets and strategic priorities.
"Our performance during the period is testament to the exceptional business we have built and the acceleration in our Data Centre business this year is a direct consequence of the strategic investments we have made in engineering capability, manufacturing capacity and our ability to respond to rapidly evolving customer requirements," said chief executive Nat Rothschild.
"With revenue now expected to exceed $1.2bn and margins above the top end of our target range of 9% to 10%, the scale and quality of our business has never been stronger.
"The board believes the group has reached a level of scale, profitability and international breadth where it is right to consider a listing on the Main Market of the London Stock Exchange.
"As such, we will be consulting our largest shareholders to understand their views on this matter.
"At our Capital Markets Day on 22 April, we will set out our plans for the next phase of our value creation journey, including the medium-term strategic ambitions and financial objectives that will shape our journey over the coming years.
"We look forward to sharing our plans for the next phase of Volex's growth with the market."
At 0921 GMT, shares in Volex were up 10.37% at 479p.
Reporting by Josh White for Sharecast.com.
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