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Volution sees FY ahead of expectations, shares rally

Volution rallied on Thursday as it said revenue and earnings for the full year were set to be ahead of market expectations after strong second-half trading.
In a pre-close update for the year to the end of July, the company – which manufacturers ventilation equipment – said group revenue is expected to be above £270m, up around 25% from the previous year and 15% higher compared to the pre-pandemic 2019 level.

At constant currency, organic revenue is set to rise by more than 20% on the prior year, supplemented by inorganic growth from its acquisitions in the year.

Adjusted earnings per share are expected to come in at around 20.5p, above Volution’s expectations.

UK revenue is set to grow by more than 20% on the year, with second half growth of almost 50% compared to the second half of 2020, which was hit by the Covid-19 crisis.

Volution said residential refurbishment has performed particularly strongly in the year, with upselling of low carbon and silent solutions increasing their share of this category. Meanwhile, a “strong” housing market with increased transactions, householders spending more time at home and greater awareness of the importance of indoor air quality has further supported the division, it said.

Residential new build activity has been stronger in recent months as housebuilders have increased output to meet demand and Volution said its commercial project orderbook is “healthy” going into the new financial year.

In Continental Europe, the company expects revenue to be up 20% on the year, or 12% on an organic constant basis. Australasian revenues are set to rise 35% on a constant currency basis.

Volution said the inflationary pressures that have affected the industry throughout the second half have had an impact on its business, with its key input materials and inbound freight costs rising sharply.

“We have largely mitigated this cost pressure, with our strong trade brands and pricing power allowing price increases such that we expect full year adjusted operating margin to be broadly in line with the circa 21% delivered in the first half of the year,” it said.

Chief executive Ronnie George said: “It has been a hugely rewarding year, with three acquisitions completed, promotion to the FTSE 250 in June 2021 and the award of the London Stock Exchange Green Economy Mark validating our market leading position.

“Increasing awareness of the importance of indoor air quality, coupled with ever tightening regulations relating to energy efficiency and carbon reduction from buildings, will continue to provide supportive long-term tailwinds for our business.”

At 0915 BST, the shares were up 6% at 480p.

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