REG-XP Power Ltd: Trading Update

XP PowerAnnouncement

27/10/2023 07:15

27 October 2023

XP Power Limited
(‘XP Power’ or ‘the Group’ or the ‘Company’)

Trading Update

Significant Action Taken To Reduce Costs and Preserve Cash

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 covering the third quarter, and October to date, as well as
detailing the significant actions being undertaken to reduce costs and
preserve cash.

Revenue in the third quarter was £75.1m (2022: £79.4m) with operating profit
slightly ahead of our prior expectation due to a better outturn in September.
Trading in October has been at least in line with our expectation. Our full
year expectations are unchanged.  

Since the update of 2 October 2023, the Group has undertaken a number of
important cost reduction and cash preservation actions that will benefit the
remainder of 2023 and 2024. The key actions include:
* A significant and wide-ranging operating cost reduction programme has
commenced, including initial headcount reductions and restrictions on
non-discretionary spend. The full year benefit of these actions in FY2024 is
expected to be in a range of £8-10m. 
* An inventory reduction plan over the period 2023 to 2025 in the range of
£10-20m, as surplus stock is progressively unwound in response to supply
chain normalisation.
* Supplier payment terms standardisation in progress.
* Reducing discretionary capital expenditure to maintenance levels.
* Suspending the dividend for the time being including cancelling the Q2 2023
payment and any further dividends relating to 2023, as previously announced.
Collectively, these actions form a meaningful part of our wider plan to reduce
leverage to within the Group’s previously stated range at an appropriate
pace.

The Group is also in advanced and constructive discussions with its lending
banks regarding future covenant requirements and other near-term actions to
strengthen the balance sheet. These discussions are proceeding as planned and
we will provide a further update shortly.

Jamie Pike, Chair, said:

“We have made good progress over recent weeks with our cost mitigation plans
to reduce the Group’s leverage. These plans are already well progressed and
discussions with our lending banks are on-track and productive.

“Longer term, the Board is confident that XP’s clear strategy leaves the
Group well positioned to grow ahead of its end markets, drive further market
share gains, improve profitability and deliver strong cash generation.”

 

Enquiries:

XP Power

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

Matt Webb, Chief Financial
Officer                     +44 (0)118 984 5515

 

Citigate Dewe Rogerson

Kevin Smith/Lucy
Gibbs                                     +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. Power
controllers are critical for optimal delivery in challenging environments but
are a small part of the overall customer product cost.

 

XP Power typically designs power control solutions into the end products of
major blue-chip OEMs, with a focus on the Industrial Technology (circa 41% of
sales), Healthcare (circa 20% sales) and Semiconductor Manufacturing Equipment
(circa 39% 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 five to seven years depending on the industry sector. XP Power has
invested in research and development and its own manufacturing facilities in
China, North America, 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 All Share Index. XP
Power serves a global blue-chip customer base from over 30 locations in
Europe, North America, and Asia.

 

For further information, please visit www.xppowerplc.com

 

 



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