XP Power reinstates dividend as order intake improves, profit rises

XP Power on Monday reinstated its dividend as it reported a rise in first-half order intake and interim profits.

The FTSE 250 company reported a 45% improvement in order intake to £145.8m. Adjusted pre-tax profit rose 2% to £17m, while revenue was up 6% to £105.1m.

The board declared an interim dividend of 18p per share, 49% lower than at the same time last year.

Own-design XP product revenues were up 10% on a reported basis, the board said in its statement, to a record £84.9m, representing 81% of total revenues, compared to 78% in the first half of 2019.

The company said the expansion of its Vietnam manufacturing facility, which was completed in 2019, allowing it to maintain product deliveries to customers, despite the temporary shutdown of its Chinese factory in response to the Covid-19 pandemic.

Cash generated from operations was down 15% to £21.5m, which was put down to investments made in working capital to fulfil increased demand.

Net debt was down 17% to £34.4m, which the company said reflected “good” underlying cash generation and its decision not to pay a final dividend.

“Once again, the group has performed extremely well in a period of macroeconomic difficulty, underlining our resilience and the structural growth end markets we address,” said chairman James Peters.

“In light of this resilient performance, I am also pleased to report that we are in a position to reinstate dividend payments with the second quarter dividend.”

Peters said the company was entering the second half with a record customer order backlog, due to the strong order intake from its semiconductor equipment manufacturing and healthcare customers, and had expanded its capacity in both China and Vietnam to fulfil demand.

“These orders underpin our expectation of further revenue growth in the second half, although we remain conscious of potential risks arising from any second wave of Covid-19, global macroeconomic challenges and ongoing trade tensions.

“The Covid-19 pandemic is accelerating the digitisation of the global economy, bringing into focus the importance of resilient supply chains and demonstrating the need for increased healthcare spending throughout the world.”

XP Power was “well-positioned” to benefit from those trends, James Peters added.

At 0919 BST, shares in XP Power were up 6.04% at 4,040p.