Volex Shares Plunge 30%


LONDON -- Volex (ISE: VLX.L) issued a profit warning in an update this morning, as it blamed "a recent unexpected change in forecast demand from the company's largest customer in its Consumer sector," as well as the continuing economic conditions for the anticipated shortfall in revenues and profits for the year ending March 31.

The cable maker expects to see total group revenue year-over-year growth of approximately 5% for the full year. However, the lower-than-expected consumer revenue is set to impact the reported operating profit, which management now expects to be broadly in line with fiscal year 2012.

Volex has implemented a cost-reduction program across the company as a result of the revised expectations. The directors "believe the fundamentals of the business remain sound but recognise there is significant work ahead to bring margins and profitability back to a level commensurate with their objectives for the business."

The trading update stated: "Despite the weaker than expected near term outlook, the Directors are encouraged by an increasing pipeline of prospective new customers and expectations of the Group's third consecutive year of increasing revenue, a trend that is expected to continue in FY2014."

Despite this, shares in Volex have plunged by over 30%, sitting at the time of writing at 176.18 pence, down from yesterday's closing price of 255.25 pence. More results are due in the company's half-year statement, which is due on October 31.

Setbacks in small caps like Volex are not infrequent, but that's the risk you run when trying to spot growth shares. It may well have the potential to rebound, but would warrant further research from ambitious investors only! If you are keen to earn such handsome returns from fast-growing but higher-risk shares, this free Motley Fool report could help you on your way.

The report explains how backing high-growth companies enduring temporary problems can put you on the path to the magic 1,000,000-million-pound milestone. Maybe one day, a recovering Volex could be the share that transforms your wealth.

Just click here to download the report today. But hurry, all Fool reports are free for a limited time only.

Investing is by no means easy in today's uncertain economy. That's why we've published "The Market's Top Sectors" -- our guide to three favorable industries. This free report will be dispatched immediately to your inbox.

Further Motley Fool investment opportunities:

The article Volex Shares Plunge 30% originally appeared on Fool.com.

Sam Robson does not own any of the companies mentioned in this article. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.