CHESHIRE cabling specialist Volex yesterday announced its half-year profits fell 60%, although it anticipates an improvement in the second half of the year.
Pre-tax profits for the Warrington-based company were just £1.1m for the six months to October 5. That compares to a figure of £2.7m for the same period in the previous year.
The decline in pre-tax profit comes despite a 23% growth in sales, to £155m.
Volex, which has 20 sites across Europe, Asia and the Americas, blamed changes in the exchange rate since 2007 – principally the US Dollar to Sterling and also the US Dollar to Indian Rupee – for reducing its operating profit by £1.6m. However, it expects that, if the dollar stays at its current level, the company will see a “favourable impact” on its balance sheet in the coming months.
The effect of falling commodity prices, in particular copper, allied with recent exchange rate changes, means the company’s management believes it will trade in line with expectations for the current year.
Volex, which employs 9,000 people globally, produces electronic and fibre optic cable assemblies, electrical power cords and harnesses for its customers, which include Sony, Canon and Rolls-Royce.
Volex chairman Mike McTighe said: “We are pleased with the solid progress the group has made during the six months. Our focus on core profitability and cash generation has delivered results and improved our financial stability. We continue to drive further operational efficiencies.
“Current market conditions make it difficult to forecast the outlook for the second half. While we have not yet seen a decline in the Interconnect markets, we are seeing a reduction in demand for Power Products, which serve the consumer market.” The firm is continuing to explore opportunities for its Power Products division, which designs, produces and supplies power cords. In September, it announced it was considering either selling or floating the Singapore-based division on an Asian stock exchange.
The division generated £3.7m profits from revenues of more than £80m in the six-month period.
Its other two divisions are Interconnect, which makes cable assemblies, and Wiring Harness, which supplies commercial vehicles, aerospace, computer and industrial markets.
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