REG-XP Power Ltd: Trading Update

XP PowerAnnouncement

10/12/2019 07:05

XP Power Limited

(“XP Power” or “the Group”)

Trading Update

Update to full year 2019 expectations, 2020 outlook unchanged

XP Power, one of the world’s leading developers and manufacturers of
critical power control components to the electronics industry, is today
issuing a trading update for the period 1 October 2019 to date.

During the period the Group has experienced some short-term disruption to
shipments from the implementation of a new Enterprise Resource Planning
(“ERP”) system, which will result in revenues and adjusted profit before
tax for 2019 being below current market consensus(1).  The outlook for 2020
is unchanged against a backdrop of robust order intake in the fourth quarter
to date.

New ERP System

In our 2018 Annual Report, we announced a project to implement the latest
version of SAP’s ERP software across our entire global supply chain.
Implementation of this new internal system is an essential step in improving
our ability to manage an international business and supply chain with a highly
diverse customer base. 

We planned to transition to the new SAP ERP system with effect from
mid-October.  However, during the system migration and in the first few weeks
of operation, we experienced some disruption to the implementation which led
to shipments temporarily falling behind expected run rates.

Whilst the Group has been shipping at or above normal run rates from
mid-November, it is now expected that the lost revenues will not be recovered
in full by the year end.  Depending on our production and shipment rates
during December we estimate that Group revenues for 2019 could be
approximately £6 million below our previous internal expectations, with our
high operational gearing meaning that adjusted profit before tax for the
current year will also be below existing expectations.

Despite these difficulties experienced in the migration, we are confident that
the new SAP ERP system will deliver significant long-term benefits to the
Group’s ability to run its global business and supply chain.

Order Intake

Order intake in the first two months of the fourth quarter has been robust and
more than 20% higher than achieved in the same two months of the prior year.
The improvement has been seen across all of our sectors.

Outlook
 

As a result of current shipment run-rates now tracking at least in-line with
our expectations, we expect to recover the fourth quarter revenue shortfall
resulting from the ERP system implementation during the first quarter of
2020.  Notwithstanding this shortterm issue, we are encouraged by a robust
order intake during the first two months of the fourth quarter of 2019 and our
expectations for 2020 are unchanged. Given the recent investments we have made
in our supply chain, in engineering resources to drive new products and the
expansion of our addressable market through acquisition, we remain confident
regarding our long-term strategy for growth.

XP Power will issue a trading update for the year ended 31 December 2019 on 13
January 2020.

(1) Company compiled consensus expectations for revenue and adjusted profit
before tax for the year ended 31 December 2019 are £201.4m and £35.9m,
respectively.

- Ends -

XP
Power                                                                       

Duncan Penny, Chief Executive Officer    +44 (0)118 984 5515

Gavin Griggs, Chief Financial Officer +44 (0)118 984 5515

Citigate Dewe Rogerson              +44(0)20 7638 9571

Kevin Smith/Jos Bieneman

Note to editors

XP Power designs and manufactures power controllers, the essential hardware
component in every piece of electrical equipment that converts power from the
electricity grid into the right form for equipment to function.

XP Power typically designs power control solutions into the end products of
major blue-chip OEMs, with a focus on the Industrial (circa 47% of sales),
Healthcare (circa 24% of sales), Semiconductor Equipment Manufacturing (circa
18% of sales) and Technology (circa 11% of sales) sectors.  Once designed
into a programme, XP Power has a revenue annuity over the life cycle of the
customer’s product which is typically 5 to 7 years depending on the industry
sector.    

XP Power has invested in research and development and its own manufacturing
facilities in China and Vietnam, to develop a range of tailored products based
on its own intellectual property that provide its customers with significantly
improved functionality and efficiency.

Headquartered in Singapore and listed on the Main Market of the London Stock
Exchange since 2000, XP Power serves a global blue-chip customer base from 29
locations in Europe, North America and Asia. 

For further information, please visit xppower.com



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