Trading Update

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  [phone]

Gavin Griggs, Chief Financial Officer  [phone]

Citigate Dewe Rogerson 

Kevin Smith/Jos Bieneman   [phone]

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