RNS Announcements

Q3 Trading Update

12 October 2020

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 third quarter and nine months ended 30 September 2020 and a further update on the impact of COVID-19.

COVID-19

We are continuing to monitor the global situation in respect of COVID-19.  The health, safety and well-being of our colleagues remains our first priority and we are providing our teams with our full support, following all public health advice, and complying with all government directives.

We are pleased to report that during the third quarter all of our manufacturing and logistics facilities around the world have been operating normally, with epidemic and prevention controls in place in line with all public health advice.

Trading

Revenue in the third quarter progressed positively as the exceptionally strong order intake we saw in the first half translated into product shipments. Order intake continues to be encouraging driven by demand in the Semiconductor Equipment Manufacturing sector. Healthcare orders have now returned to normal levels, following the COVID-19 related demand we saw in the first six months of 2020. Overall, orders were up 29% for the nine months ended 30 September 2020 compared with the prior year, including a £15-20 million net increase linked to COVID-19.

Production volumes from our Asian manufacturing facilities increased significantly in the third quarter as we ramped up production to meet demand. This delivered significantly increased revenues in the third quarter as we fulfilled the sizeable backlog of Healthcare and Semiconductor Equipment Manufacturing orders received during the first half. The book to bill ratio, which tracks the relationship between orders received and completed sales, was 0.82 for the third quarter (2019: 1.04) reflecting the strong production volumes and revenue growth in the period.  The year-to-date book to bill is 1.16 (2019: 1.02).

£ Millions20202019ChangeChange in constant currency
Orders
Third quarter56.355.91%2%
Year to date202.1156.529%33%
Revenues
Third quarter69.053.828%32%
Year to date174.1152.714%13%
Book to Bill
Third quarter0.821.04-0.22
Year to date1.161.020.14

Financial position and dividend

Net debt at 30 September 2020 was £28.2 million, compared to £34.4 million at 30 June 2020, and the Group has immediately available committed liquidity of c.£64 million through bank facilities and cash balances (30 June 2020: c.£61 million).  The Group will continue its disciplined approach to capital allocation, prioritising a strong balance sheet.

After considering the above the Board is proposing a dividend for the third quarter of 20 pence per share (2019: 20 pence per share) which will be paid on 15 January 2021 to shareholders on the register on the 15 December 2020.

CEO Succession

The intention of Duncan Penny to retire as CEO at the end of 2020 and the appointment of Gavin Griggs, current CFO, as new CEO with effect from 1 January 2021, has been announced separately today.

Outlook

We enter the final quarter of 2020 in a healthy position, with an order backlog of £125.7 million (30 June 2020: £138.2 million), due to the COVID-19 related Healthcare demand experienced in the first half and the ongoing cyclical recovery of the Semiconductor Equipment Manufacturing sector. While demand across all sectors remains generally encouraging, Healthcare orders have now normalised, and we do not expect a repeat of the exceptional demand experienced earlier in the year. Our manufacturing facilities have successfully increased production to fulfil this demand, underpinning a robust third quarter revenue performance and our outlook for the final quarter.

The Board anticipates the Group’s performance for full year 2020 will be towards the top end of current analyst expectations, although we remain conscious of potential risks arising from a second wave of COVID-19 and the resultant global macroeconomic impact, and ongoing trade tensions.  The Board remains confident in the long-term market opportunity for the Group, supported by the structural growth drivers in the marketplace, and in our ability to capture this opportunity.

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 (c.33% of revenue), Healthcare (c.29% of revenue), Semiconductor Equipment Manufacturing (c.28% of revenue) and Technology (c.10% 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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