REG-XP Power Ltd: Trading Update

XP PowerAnnouncement

16/02/2024 07:15

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (EU) NO 596/2014 (AS IT FORMS PART OF RETAINED EU
LAW AS DEFINED IN THE EUROPEAN UNION (WITHDRAWAL) ACT 2018).

FOR IMMEDIATE RELEASE.

 16 February 2024    

 

XP Power Limited

(`XP Power' or `the Group' or `the Company')

 

Trading update - initial view on 2024 outlook

 

XP Power, one of the world's leading developers and manufacturers of critical
power control solutions for the Industrial Technology, Healthcare and
Semiconductor Manufacturing Equipment sectors, provides an initial view of the
outlook for the year ending 31 December 2024 ("2024" or "the year").

 

2024 outlook

The Board has concluded that there is likely to be a shortfall in revenue in
2024, leaving the outlook for 2024 significantly below market expectations.
This is based on recent order intake, revenue performance and discussions with
customers, particularly within the Healthcare and Industrial Technology
sectors, which confirm unusual, temporarily soft demand conditions and
destocking. These softer trends have also emerged within our direct industry
peers.

In early 2024, we have seen, as expected, the continuation of the ongoing
cyclical slowdown in the Semiconductor Manufacturing Equipment sector and we
continue to expect conditions in this sector to improve as the year
progresses.

We now expect to also see a slowdown in the Industrial Technology and
Healthcare sales, driven particularly by customer inventory movements. These
markets are not typically cyclical for us. The slowdown in 2024 is driven by
customer stock movements as they reduce their inventory in response to shorter
delivery lead times.

In general, we expect the weakness we are currently seeing to be relatively
short lived and indeed there have been some more encouraging signals from
certain customers, especially for 2025, in recent weeks. The timing and speed
of the recovery is hard to predict however. We expect 2024 to be significantly
second half weighted with an improvement in trading as the year progresses.

Cost savings

As outlined in January, the cost savings actions previously announced remain
on track and the Group has identified additional savings that will be
delivered in the first quarter. These combined actions will significantly
lower overheads year-on-year while preserving capability to respond to the
recovery when it comes.

Balance sheet

The Group's cash generation toward the end of 2023 was ahead of expectations,
as reflected in the year-end net debt position of £112.7m, and we expect this
to continue in 2024 with net debt below our prior assumption. A trading
performance in line with the Board's expectations would leave net debt/EBITDA
at 31 December 2024 at or below 2.5x versus a covenant limit of 3.5x. The
Group maintains significant levels of liquidity.

2023 full year results

Our year-end financial close processes have identified some capitalised
product development costs that needed to be amortised or impaired, adding £4
million to costs. This is a non-cash item. Approximately half of this is
one-off in nature. Underlying operating profit for full year 2023 absent these
costs was in line with our expectations.

The Group will announce its results for the year ended 31 December 2023 on 5
March 2024.

Medium term outlook

The Board remains confident that the Group has strong medium-term prospects,
and significant value, underpinned by our leading market position and broad
product portfolio.

 

Enquiries:
XP Power               
Gavin Griggs, Chief Executive Officer +44 (0)118 976 5155

Matt Webb, Chief Financial Officer      +44 (0)118 976 5155
 Citigate Dewe Rogerson 
Kevin Smith/Lucy Gibbs +44 (0)20 7638 9571

 

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 Semiconductor Manufacturing
Equipment (circa 32% of sales),  Industrial Technology (circa 43% of sales)
and Healthcare (circa 25% sales) and 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 SmallCap 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 xppowerplc.com

 

 

 

 

 

 



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