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Investing.com -- Volution Group (LON:FAN) on Thursday released a positive pre-close trading update for fiscal year 2025, indicating performance ahead of market expectations.
The ventilation products supplier reported that organic revenue growth for FY25 is expected to be slightly above its target range of 3%-5%, accelerating in the second half after delivering 4.0% growth in the first half.
The UK market has been the main growth driver, with residential refurbishment showing resilience and new build performing "very well" supported by demand for low carbon products and regulation.
The company also saw strong exports, particularly to Ireland’s new build sector, and a return to growth in commercial markets.
Central Europe delivered strong performance, boosted by growing demand for heat recovery products from ClimaRad and ERI, along with an expanded product range at VMI in France.
Nordic markets performed in line with the first half, with Swedish refurbishment relatively strong despite weaker demand in new construction.
Australasia saw conditions broadly unchanged from the first half, with challenging markets in New Zealand offset by good performance in Australia.
Total (EPA:TTEF) revenue growth on a constant currency basis is expected to exceed 20%, reflecting both organic growth and the contribution from acquisitions.
EBITA margins are projected to remain broadly in line with the first half (22.7%) despite dilution from the Fantech acquisition, which contributed for the full six months of the second half compared to just two months in the first half.
On an organic basis, margins are expected to show modest year-on-year improvement.
Cash generation is anticipated to exceed the company’s 90% target (compared to 110% in the first half) due to strong inventory management and working capital control. The company is expected to end the year with a net debt to EBITDA ratio of approximately 1.3x.
Looking ahead, Volution’s board expects adjusted earnings per share to be slightly ahead of current market consensus of 32.0p (range:31.6p to 32.5p), despite foreign exchange creating a £5 million headwind to revenue and over £1 million headwind to EBITA.
The company noted it has "good capacity for future investment and earnings accretive investments," suggesting it remains positioned for potential M&A activity, particularly in Europe where it estimates its market share at only 5%-6%.
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