Shares in telco testing firm Calnex Solutions recovered strongly today after investors had been rattled earlier this year by a warning of slowing orders.

A statement in March, saying performance in FY24 will be below that achieved in FY23, saw the shares plunge by a third to 117p.

A more cautious economic outlook among customers led to delays in orders being placed, a scenario mirrored in recent market updates from sector peers such as Keysight, Viavi and Spirent Communications.

Today Linlithgow-based Calnex posted double digit growth across revenue and profit, in line with market expectations. This was driven by the growth in cloud computing and the roll out of 5G along with the introduction of new standards for the telecoms industry.

Revenue at the Linlithgow-based company increased 25% to £27.4m and profit before tax was up 21% to £7.2m. The shares, quoted on AIM, closed 8p or 8.08% higher at 107p.

The firm said considerable operational and strategic progress has been made during the period, resulting in increased market opportunity.

Trading in Q1 FY24 has continued as anticipated, and the board is confident in delivering results for the year in line with market expectations as revised in March 2023.

Whilst customer budgets continue to be restricted in the near term, the breadth of Calnex’s customer base across multiple regions, expanding product portfolio and strong balance sheet, provide continued confidence in the future.

Tommy Cook, chief executive, said: “FY23 was another year of solid progress. While customer budgets remain restricted in the short term, customer engagement levels remain high, and we have been encouraged to see the early signs of a more stable macro environment,” he said.

Speaking later to Daily Business, he said the company had looked at a couple of potential acquisition targets but decided not to take them any further.

He said he had no concerns about BT shredding jobs as infrastructure projects reached maturity.

“A lot of people feel 5G hasn’t really started so there is still a lot of infrastructure required.”

The board proposes a final dividend of 0.62 pence per share, making a total of 0.93 pence per share for FY23 (FY22: 0.84 pence).

Analysts at Cenkos said Calnex has not seen any cancellation of customer projects and with customer engagement still strong, along with a Q1/24 growing pipeline, the company anticipates a return to growth once customer spending patterns normalise.