XP Power revenues seen 'significantly below' FY expectations

Power control solutions manufacturer XP Power warned on Friday that full-year revenues would be "significantly below market expectations", sending shares sharply lower in early trading.

XP Power noted that based on recent order intake, revenue performance and discussions with customers, particularly within the healthcare and industrial technology sectors, it had confirmed "unusual, temporarily soft demand conditions and de-stocking". The group added that these softer trends had also emerged within its 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," said XP.

"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, XP expects weakness to be "relatively short-lived" and said there had already been "some more encouraging signals" from certain customers, especially for 2025, in recent weeks. However, it noted that the timing and speed of the recovery was hard to predict and expects 2024 to be "significantly second-half weighted" with an improvement in trading as the year progresses.

XP added that its year-end financial close processes had identified some capitalised product development costs that needed to be amortised or impaired, adding £4.0m to costs. Underlying operating profits for 2023 were absent these costs.

As of 0855 GMT, XP Power shares had slumped 38.58% to 920.0p.

Reporting by Iain Gilbert at Sharecast.com