Pre-tax profits down nearly four fifths
UK electrical component firm Volex is embarking on a “comprehensive” round of cost cutting following Apple’s decision to snub it from making the iPhone 5 connector. Apple changed the cable used on its devices when it unveiled the latest iPhone last month, choosing a different design after nine years of using Volex. The news sent Volex’s shares crashing with further bad news yesterday [31st October 2012] when the manufacturer revealed turnover to September was $249.3 million (£154.6 million), down on last year, while pre-tax profit was down 78 per cent to $2.2 million.Volex’s shares fell a further four per cent on the London Stock Exchange, closing last night at 162p compared to a year high of 290p.
“The first half has been tough and lower than anticipated growth with the largest customer in the consumer sector and a challenging economic environment have combined to produce a disappointing set of results,” the company said in a statement.
Apple’s latest smartphone comes with a ‘Lightning’ plug connector, replacing the 30-pin adapters that date back to early iPods – a type that Manchester-based Volex, which until now derived an estimated 30 per cent of its revenues from the iPhone giant, would have previously supplied.
Apple’s new Lightning cables also contain new authentication chips inside their ultra tiny housing, ironically made by felllow UK manufacturer Wolfson Microelectronics, making unauthorised third-party cables unworkable.
Wolfson’s shares, by comparison, are riding high at 208p compared to 96p last December.