18 September 2012 – trading update
A disappointing trading update has been produced by connections group Volex. The group’s largest customer in its consumer business has reduced its demand for the company’s products and this, combined with the overall weakness in the world economy, will mean that revenues and profits for the year to 31 March 2013 will be below expectations. Although revenues are still expected to be 5% higher than 2012, operating profits will be at a similar level to last year. The group is taking action to reduce its cost base accordingly. However, although short-term prospects are unexciting, the group believes that its long-term prospects remain encouraging. There is an increasing pipeline of new customers and although some work needs to be done to restore margins we believe that the share price fall this morning (down 87p) has been overdone and there could well be a short-term bounce. BUY FOR RECOVERY.