XP Power Q1 revenues slide, remains 'confident' of market position

Power control components manufacturer XP Power said on Wednesday that both order intake and revenue declined in the first quarter but said it remains confident of its market position.

XP Power said first-quarter order intake was down 29% at £43.7m, while revenues fell 17% to £64.6m and the group's book-to-bill ratio contracted to 0.68x from 0.79x at the same time a year earlier. XP's order book at the end of Q1 was approximately £171.0m.

The London-listed group said sales and order intake in the semiconductor manufacturing equipment sector were at a similar run-rate to that achieved in the second half of 2023, while sales and order intake in its healthcare and industrial technology sectors slowed as customers continued to destock.

Net debt at 31 March was £103.4m, £9.3m lower than at the end of FY23, with the company generating "strong cash flow" from ongoing inventory reduction and cash preservation measures. XP expects net debt to peak around the mid-year point, with its previously announced actions to reduce costs and borrowings said to be "on track" and "delivering the benefits expected".

Looking forward, XP said its full-year expectations were unchanged, with Q2 revenue likely to be "slightly lower than Q1" due to ongoing customer destocking, and trading expected to improve during 2024 as channel stock levels reach equilibrium and as demand for semiconductor manufacturing equipment begins to increase.

"Order intake in Q2 will provide greater clarity on the timing and trajectory of this improvement," said XP Power. "We are confident that our market positions remain strong and that the group is well positioned to prosper as our key markets resume their trajectory of healthy long-term growth."

As of 0940 BST, XP Power shares were up 7.77% at 1,068.0p.

Reporting by Iain Gilbert at Sharecast.com