Volution posted a rise in interim profit and revenue on Thursday as it said full-year earnings are set to be ahead of current market expectations thanks to strong margin expansion.
In the six months to 31 January 2021, adjusted pre-tax profit increased 27.1% to £26.1m on revenue of £131.7m, up 10.9% on the same period a year ago. Adjusted earnings per share were 23.2% higher at 10.1p.
The company’s adjusted operating margin rose to 21.1% from 18.3%, hitting its 20% target six months earlier than expected. This was achieved through a combination of product cost initiatives, indirect cost reductions from the UK restructuring undertaken in the second half of financial year 2020, and operating leverage as a result of volume growth.
Volution, which designs and manufactures energy efficient indoor air quality solutions, said all three geographic regions saw growth during the period.
The company proposed an interim dividend of 1.9p a share, having not paid a dividend in the first half a year prior due to the Covid-19 pandemic, “reflecting strong profitability, free cash generation and confidence in our future growth prospects”.
“Across our group we have been working with industry wide supply chain inefficiency for some time now and although these interruptions are likely to continue, we believe we are now over the worst impacts with greater visibility for the coming months,” Volution said.
“With a strong order book across all areas, price increase initiatives underway to offset the inflationary pressures and in general an expected easing of the impacts of Covid-19 in all of our geographic regions, we are confident of making progress in the second half of the year. Underpinned by the margin expansion we have delivered in the first half of the year, the board expects earnings for the full year to be ahead of current market expectations.”
At 1045 GMT, the shares were up 8.3% at 340p.
