News of a profits upgrade pushed shares in ventilation equipment specialist Volution Group through the roof on Wednesday.
At 421.4p per share, Volution’s share price was 5.8% higher in midweek trading, making it the FTSE 250’s biggest gainer in midweek trading.
The West Sussex company said that “whilst new build market conditions remain challenging, our refurbishment activities continue to benefit from strong regulatory drivers and consumer focus on eliminating the damaging health impacts of mould and condensation in buildings.”
Volution said that a strong start to the financial year — coupled with the impact of acquisitions made earlier in the calendar year — mean that it now expects to record earnings “ahead of the current range of market expectations for the financial year.”
Meanwhile, improved pricing, new product introductions and cost-control initiatives have resulted in improved gross and operating profit margins compared to the last financial year.
The company noted that City analysts are tipping earnings per share of 25.3p to 26.3p for the 12 months to July 2024. Earnings came in at 25.8p per share during fiscal 2023.
Volution said that each of the acquisitions it made this calendar year are “performing well.” Earlier in 2023 it agreed to acquire VMI in France, I-Vent in Slovakia and Croatia, and DVS of New Zealand.
Strength Across The Board
Revenues rose 8% during the four months to 30 November, with organic revenues at constant currencies up 2.9% year on year.
Volution — which operates in UK, Continental Europe and Australasia — said that “all three geographic regions grew earnings in the period with the strongest performance coming from our UK residential activities.”
Refurbishment activity in Britain was strong across the public and private sectors during the period, with resolution of mould and condensation issues, along with improved customer awareness of air quality issues, driving sales higher.
The FTSE 250 firm generates around two-thirds of sales from the refurbishment market. It commented that “despite the significant reduction in new build completions, this market benefits from regulatory drivers moving demand towards higher value energy efficient ventilation solutions.”
The drive towards energy efficiency has boosted performance in its other markets, Volution said. But it added that trading in markets with greater exposure to newbuild activity has been weaker “as higher interest and mortgage rates have led to subdued demand.