Better-than-forecast trading for the last financial year blew shares in ventilation specialist Volution higher on Thursday.
At 676p per share, the FTSE 250 company was last 4.2% higher, leading the mid-cap index northwards.
Revenues leapt 20.6% to £419.1 million over the 12 months to July, or 21.9% at constant currencies.
Organic growth was 5.7%, driven by a 9.5% increase in the UK. Volumes in its home market were driven by strength in the residential market, support from changing regulations and market share gains.
Volution’s acquisition of Fantech Group in 2024 boosted group headline sales by 16.2%.
Margins, Profits Up
Volution’s adjusted operating margins dropped 20 basis points over the year, to 22.3% due to lower Fantech’s margins. On an organic basis margins increased 50 basis points.
Adjusted operating profit improved 19.7%, to £93.4 million. Adjusted pre-tax profit came in at £83.9 million, up 18.7% year on year.
The business raised the full-year dividend by a fifth, to 10.8p per share.
UK Strong, Mixed Elsewhere
In the UK, total sales came in at £176.1 million. A 9.5% year-on-year organic rise was driven by strong conditions in the Residential division, which accounts for roughly two-thirds of the region’s revenues.
Sales in this segment rose 9.7% year on year.
Commercial growth was lower at 6.9%, while Export sales increased 29.4%. OEM sales dropped 2%. Volution described its end markets as “generally challenging” in the period.
Adjusted operating profit margins rose 100 basis points, to 26%. Adjusted operating profit increased 14.1% year on year to £45.9 million.
Organic revenues in Continental Europe rose 3.1% to £136.6 million, while adjusted operating profit rose 2.5% to £32.9 million. Performance was mixed, with Central European sales rising 6% but dropping 2.3% in the Nordics.
In Australasia, organic sales edged 0.6% higher to £106.4 million. Adjusted operating profit jumped 83.5% following the Fantech acquisition, to £21.9 million.
Upbeat Take
Commenting on what he described as an “outstanding performance,” Volution chief executive Ronnie George said “organic growth at 5.7%, driven by volume, was ahead of our target range and we completed our largest acquisition to date – the Fantech Group in Australasia — which provided a significant boost to revenues and earnings.”
He noted that “Volution’s leading market positions and products, the excellent service we provide to our customers, and our structural growth drivers, are enabling us to continue to outperform our end markets.”
George added that “the new year has started well… notwithstanding the still difficult economic backdrop in many of our end markets, we remain confident of continuing to deliver compounding growth and another year of good progress.”
“Solid Results”
Commenting on what she described as “solid results,” analyst Tania Maciver of RBC Capital said she expects Volution “to continue with its focus on organic growth strategy across all markets, making efficiency improvements in support of margins.”
On its other “core” growth plank of mergers and acquisitions (M&A), she said that “we expect the focus will turn to Europe where market share is relatively lower and markets are fragmented.”
Maciver added that “while there are some signs of improvement in new build in the UK, we expect the underlying construction market recovery is awaiting further guidance from the UK budget in November.”