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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.
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