Shares of Volex Plc (VLX.L) plunged around 27 percent in the morning trade in London Stock Exchange after the provider of electrical, digital and optical connections warned about its fiscal 2013 revenues and normalised operating profit due mainly to a general softening of demand across all sectors.
The company also said that Daniel Abrams will join as Group Finance Director and executive director of the Board on December 17. Abrams succeeds Andrew Cherry, who announced on December 10 that he will leave the company on March 31, 2013. Volex added that Karen Slatford, currently a non-executive director of the Company, will assume the role of Deputy Chairman.
Abrams most recently was Group Finance Director with Fiberweb plc, a manufacturer of specialist non-woven fabric technology from February 2008 to April 2012. Prior to that he was with Xenova plc, PepsiCo and Diageo plc.
Regarding its trading update, Volex said it now expects full -year revenues in the range of $470 million to $485 million and normalised operating profit in the range of $11 million to $14 million.
In the year 2012, the company's revenue was $517.77 million and normalised operating profit was $32 million.
The company said in its statement, "Contrary to earlier expectations of growth in second half revenue, the Company has experienced a general softening of demand across all sectors as well as delays in specific project timelines, which does not include our largest customer."
Volex in August had said that it expects profit and revenue for the year 2013 to fall short of its prior expectations due to an unexpected change in forecast demand from the company's largest customer in its Consumer sector and the continuing adverse macro-economic conditions.
The company further said today that among the earlier announced three key initiatives to improve profitability, reductions in operating expenses actioned to date exceed the initial 10% target, and underlying Consumer gross margin improvements are on track. Revenue pipeline continues to grow, but conversion to revenues delayed.
Given the reduced revenues, the Board has taken further decisive action and said it is widening the scope of the cost reduction initiatives, implementing programs to better align the sales organisation with current and future customer needs, strengthening the senior sales leadership and accelerating the company's move to a higher margin product portfolio.
Volex shares are currently trading at 102.58 pence in London, down 37.67 pence or 26.86 percent.
by RTT Staff Writer
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