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Volution anticipates earnings at top end of forecasts on good progress

20th Jul 2023 11:31

(Alliance News) - Volution Group PLC on Thursday said that it has continued to make good progress over the financial year, and expects adjusted earnings per share towards the top end of current market forecasts.

For the year ended July 31, the West Sussex-based designer and manufacturer of energy-efficient indoor air quality solutions said it expects group organic revenue growth on a constant currency basis of approximately 5%.

Current market forecasts are for adjusted earnings per share in the range of 23.7 pence to 25.6p, with a consensus of 24.4p.

According to Volution, the UK delivered its highest rate of organic growth this year, with residential revenue performing particularly strongly.

Continental Europe softened in the second half of the year, with Germany in particular affected by a contraction of new build activity and the Nordics impacted by both new build weakness and some earlier, but now completed, destocking in the refurbishment market.

Meanwhile, revenue growth in Australasia slowed this year, after a number of years of "very strong growth".

Group operating margins for the year were maintained at around 21%. Volution attributed this to strong pricing discipline, along with robust cost control, value engineering initiatives and good factory efficiency.

Looking to the year ahead, Volution also said it has signed an agreement to buy DVS - or Proven Systems Ltd - in New Zealand for an initial consideration of NZD18 million, or GBP8.7 million.

There is also a potential contingent consideration of up to NZD9 million, based on stretching future earnings targets. The transaction is expected to complete in August.

"Whilst higher interest rates, leading to higher mortgage rates, are dampening new build construction demand, [repairs, maintenance and investment], which accounts for approximately 70% of group revenue, has proved resilient enabling us to deliver group organic growth of [around] 5%," said Chief Executive Officer Ronnie George.

"The group's structural growth drivers remain supportive and, although general end market sentiment is weaker, we continue to see high levels of interest in our wide range of low carbon ventilation solutions, driven by consumer awareness of the importance of indoor air quality, and the regulatory back drop focused on decarbonising buildings."

Full year results for the year ending July 31 will be announced on October 5.

Volution shares were trading 5.8% higher at 404.20 pence each in London on Thursday morning.

By Holly Beveridge, Alliance News reporter

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