Shares of Volex Plc (VLX.L) plunged around 29 percent in the morning trade on London Stock Exchange after the provider of electrical, digital and optical connections said it expects profit and revenue for the year ending March 31, 2013 to fall short of its prior expectations.
The company said the revision in forecast is due to a recent unexpected change in forecast demand from the company's largest customer in its Consumer sector and the continuing adverse macro-economic conditions.
According to the company, total full-year revenues would grow about 5 percent, while the lower than expected Consumer revenue and resulting loss of operational leverage will impact the reported operating profit, which is now expected to be broadly in line with that of last year.
Volex pointed out that these lower growth expectations are driven primarily by a delay in product launches and a change in product component strategy by its largest customer. Also, the company is experiencing lower current and forecast demand from a number of other Consumer sector customers reflecting the broader economic conditions.
Meanwhile, the company expects revenues and margins in Industrial, Telecoms/Datacoms and Healthcare sectors to be broadly in line with previous expectations.
Volex said it has initiated a program of material cost reductions across the firm to reflect the revised revenue and operating profit expectations. The company is also continuing its focus on improving gross margins through improved labour efficiency and productivity, reduced scrap rates, other operational improvements and the introduction of new, higher margin products.
"Despite the weaker than expected near term outlook, the Directors are encouraged by an increasing pipeline of prospective new customers and expectations of the Group's third consecutive year of increasing revenue, a trend that is expected to continue in FY2014," the company said in its statement.
Volex said it will provide further details in its Half Year announcement to be released on October 31.
Volex shares are currently trading at 180.55 pence in London, down 74.70 pence or 29.27 percent.
| || |
| To receive FREE breaking news email alerts for Volex Group PLC and others in your portfolio|
by RTT Staff Writer
For comments and feedback: firstname.lastname@example.org