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