XP Power FY profits slump as margin contraction offsets improved order intake

Critical power control solutions manufacturer XP Power saw reported profits slump in 2021 despite improved order intake and a modest uptick in revenues.

XP Power said full-year operating profits had fallen 21% to £29.7m and pre-tax profits had sunk 20% to £28.4m as a 210 basis point decrease in gross margins to 45.1% offset a 33% improvement in order intake £343.4m and 3% revenue growth to £240.3m. Diluted earnings per share fell 29% to 113.8p.

The FTSE 250-listed group also noted that its operating cash flow declined 20% to £36.4m, while net debt shot up 37% to £24.6m.

On the other hand, XP Power highlighted that it was entering 2022 with a record order book of £217.0m, up from £124.0m at the same time a year ago and representing roughly 80% of analysts' consensus.

XP Power also proposed a final dividend for 2021 of 36.0p per share, flat year-on-year, taking its total dividend for 2021 to 94.0p per share, up from 2020's full-year dividend of 74.0p per share.

Chairman James Peters said: “Our clear strategy and strong execution has helped us navigate well through what have been challenging markets of recent years, with 2021 being no exception.

"The new financial year has started positively with our record order book offering greater visibility than normal.”

Separately, XP Power revealed that Peters had informed the group of his intention to retire from the board following the company's annual general meeting in April 2023.

Peters, who will have spent 35 years with the group and its predecessor companies by the time of his departure, will be replaced by Spirax-Sarco chairman Jamie Pike, who has been appointed to the board as a non-executive director, and designate chair, with immediate effect.

As of 0730 GMT, XP Power shares were up 0.89% at 4,358.35p.