Volex Slumps as Apple Supplier’s Sales Falter: London Mover
Volex Plc (VLX), a U.K. maker of power cords for computers and devices including Apple Inc. (AAPL)’s iPhone, fell the most in more than at least 21 years after lowering earnings forecasts as demand unexpectedly slumped.
The shares plunged 37 percent, the biggest decline since February 1991, to 89 pence, the lowest since November 2009. That extended the drop this year to 66 percent. The volume of shares traded was 30 times the six-month daily average.
Revenue for the year ending March 31 will probably be $470 million to $485 million, the London-based company said in a statement today. That compares with the median estimate of $542 million of seven analysts surveyed by Bloomberg. Adjusted operating profit will be $11 million to $14 million, compared with last year’s $32 million. Volex said.
“Volex’s surprise trading update is a disappointment,” Thomas Rands, an analyst at Investec Plc (INVP), said in a note to clients. “The company has struggled to generate revenue growth in the recent past. However, we think that earnings are somewhat recoverable over time.”
The profit warning came less than three months after Volex plummeted 27 percent after reporting an unexpected drop in demand from its largest customer, which it didn’t identify.
Volex said today that demand is softening “across all sectors” and that some customers’ projects are delayed. The supply slowdown based on project timelines doesn’t apply to the largest customer, which analysts say is Apple. Volex said it is widening cost-reduction initiatives and accelerating a move to higher-margin products.
Rands cut his recommendation to hold from buy and lowered his 12-month stock price prediction to 125 pence from 225 pence. He reduced his estimate for full-year adjusted earnings per share to 11.4 cents and said so-called normalized operating profit will probably be $10.5 million, or 57 percent less than he previously predicted.
Daniel Abrams was hired as finance director and will start his role on Dec. 17, Volex said. The previous chief financial officer, Andrew Cherry, is leaving the company, Volex said four days ago.
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