REG-XP Power Ltd: Trading Update

XP PowerAnnouncement

04/06/2020 07:05

4 June 2020

XP Power Limited

(“XP Power”, “the Group” or “the Company”)

Trading Update

Outlook bolstered by order intake from Healthcare and Semiconductor Equipment
Manufacturing clients

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 five months ended 31 May 2020.

COVID-19

The Group’s primary focus remains the health, safety and well-being of our
colleagues and we continue to provide our teams with our full support, follow
public health advice, and comply with all government directives.

All colleagues who can work from home continue to do so effectively. Internal
surveys and other feedback from frequent communications indicate that most of
our people are reporting that home working has not negatively impacted their
well-being or productivity. The need to work within the constraints of
COVID-19 control measures is encouraging innovation in working practices, for
example, we have used video-conferencing tools to continue many engineering
projects and activities.

All of the Group’s manufacturing and logistics facilities are currently
operational. Our operational performance is continuing to improve following
the extended shutdown of our Chinese manufacturing facility in February, and
the associated supply chain challenges, that we experienced earlier in the
period.

Our local supply chains in China and Vietnam are working at pre-COVID-19
capacity levels. Despite experiencing a modest level of certain specific
component shortages, overall the supply chain is proving resilient, but we
continue to monitor the situation closely.  The recent significant reduction
in air freight capacity has resulted in substantial increases in air freight
costs on routes from Asia into Europe and North America which are subject to
negotiation with customers.

Current trading

Trading during April and May 2020 has been encouraging.  Order intake in
April and May continued to be strong, building on the levels seen in Q1 and
the Group will enter H2 2020 with a healthy order book. 

The Group has seen exceptional levels of demand from its Healthcare customers
and is working hard to actively deliver the related order backlog. The demand
from these customers has been very broadly based and includes critical
applications used to treat COVID-19 patients including ventilators, Continuous
Positive Airway Pressure (CPAP) devices, patient monitors, hospital beds, drug
delivery devices, medical suction pumps and specialist lung ultrasound and
X-Ray machines.  We expect this level of demand to normalise in H2 2020.

The Semiconductor Equipment Manufacturing sector, which has started to recover
from the cyclical downturn we experienced in 2019, also continued to see
strong order intake in April and May. The Technology and Industrial
Electronics sectors have also seen resilient order intake, although over more
recent weeks a small number of Industrial Electronics customers have deferred
scheduled orders due to weakness in their end markets or their own production
capacity issues related to COVID-19. To date, the impact of these deferrals
has been more than compensated for by demand from our Healthcare and
Semiconductor Equipment Manufacturing customers. The book to bill ratio, which
tracks the relationship between orders received and completed sales, was 1.48
for the year to May 2020 (2019: 1.05 times), similar to the position at the
end of Q1.

 £ Millions      5 months to May 2020  5 months to May 2019  Change  Change in constant currency 
 Orders                                                                                          
 First quarter                   73.1                  54.6    +34%                         +33% 
 April and May                   54.9                  29.9    +84%                         +76% 
 Year to date                   128.0                  84.5    +52%                         +49% 
                                                                                                 
 Revenues                                                                                        
 First quarter                   49.1                  46.9     +5%                          +4% 
 April and May                   37.2                  33.7    +10%                          +5% 
 Year to date                    86.3                  80.6     +7%                          +5% 
                                                                                                 
 Book to Bill                                                                                    
 First quarter                   1.49                  1.16   +0.33                              
 April and May                   1.48                  0.89   +0.59                              
 Year to date                    1.48                  1.05   +0.43                              

Financial position

Net debt at 31 May 2020 was £38.0 million compared to £45.3 million at 31
March 2020 and £41.3 million at 31 December 2019. The Group currently has
immediately available committed liquidity of circa £58 million through
committed bank facilities and cash balances. The Board expect net debt to
reduce further during the second half of 2020.

Outlook

The Board is pleased with the Group’s trading performance in the
year-to-date, which demonstrates both the Group’s operational resilience and
the benefits of our end market diversification.  Order intake in Healthcare
and Semiconductor Equipment Manufacturing, in particular, remains
encouraging.  Current conditions in the global airfreight market are creating
some cost pressures which are likely to remain a feature until capacity
recovers.  

Our strong order book gives good near-term visibility, but high levels of
economic uncertainty and general market volatility continue to provide a wide
range of potential outcomes for 2020. Longer term, the Board believes XP Power
to be very well positioned to grow ahead of its end markets supported by
strong cash generation and a robust balance sheet.  

Enquiries:

XP Power 

Duncan Penny, Chief Executive Officer  +44 (0)118 976 5515

Gavin Griggs, Chief Financial Officer      +44 (0)118 976 5515

Citigate Dewe Rogerson                    

Kevin Smith/Jos Bieneman                    +44 (0)207 638
9571

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 Electronics (circa 45% of
revenue), Healthcare (circa 23% of revenue), Semiconductor Equipment
Manufacturing (circa 19% of revenue) and Technology (circa 13% of revenue)
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 is a constituent of the FTSE 250 Index. 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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