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The ventilation products specialist should be boosted by renewed focus on air quality in the wake of the pandemic
Thursday 09 Jul 2020 Author: Tom Sieber

There aren’t too many businesses plugged into emerging trends for a post-coronavirus world which trade on attractive valuations
but in our view Volution (FANis one.

Headquartered in Crawley, the company is an international operator engaged in the design, assembly and marketing of ventilation fans, systems and ducting for domestic and commercial buildings.

Investors should buy now ahead of a trading update covering the financial year running to 31 July.

Volution is a leading player across several global markets, including the UK, Scandinavia, New Zealand and Germany.

Increased focus on air flow and quality driven by coronavirus, which has principally been a respiratory disease, should be a longer-term driver for the business with the short-term hit from a reduction in construction activity more than reflected in the current share price.

Based on forecasts from Peel Hunt, the company trades on a 2021 price-to-earnings ratio of 12 times and yields 3%.

As chief executive Ronnie George recently observed: ‘There is an increasing awareness, and body of research, demonstrating that efficient and well ventilated buildings are essential for health and wellbeing and have a key role to play in governmental strategies to reduce the future risks from Covid-19 and other viruses.’

This should act as a catalyst for fresh regulation. Most of the company’s current business comes from new construction projects but the introduction of rules affecting existing buildings could help the repair, maintenance and improvement market make a more meaningful contribution to group revenue.


Recent trading has been encouragingly resilient. In May, outside the UK which accounts for approximately half of its revenue, Volution saw business at around 90% of the level from a year earlier. The UK has been slower to come back, running at 42% of prior year levels for the same month, but all its facilities are now operational again.

This robustness is reflected in a strong financial position, with cash on deposit increasing from £41 million at the end of March to £49 million at the end of May and its £120 million credit facility undrawn.

This should enable management to continue to invest in M&A in what remains a fragmented market and where the disruption created by coronavirus could generate opportunities.

Internally the company is pushing ahead with its operational improvement plan as it looks to make its processes more streamlined. This will involve a modest number of job losses in the UK.

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