XP Power 'performing well' at end of 2020

The FTSE 250 company said profit was expected to be ahead of expectations, as the “exceptional” healthcare demand led to production efficiency gains and improved gross margins.

Order intake in the fourth quarter continued to be positive, driven by continued demand in the semiconductor equipment manufacturing sector.

For the year ended 31 December, order intake was up 20% compared with 2019, including the £15m to £20m net increase directly linked to Covid-19, as detailed in its third quarter trading update in October.

Revenue in the fourth quarter was up 25% compared with the fourth quarter of 2019 but, as it had expected, decreased from the “record levels” seen in the third quarter of 2020.

It put that down to healthcare shipments returning to more normal levels, following the exceptional Covid-19-related demand in the first half of 2020.

Overall revenue for 2020 was up 16% on 2019.

The book-to-bill ratio, which tracks the relationship between orders received and completed sales, was 0.95 for the fourth quarter, compared to 1.24 a year earlier, which the board said reflected the “continued strong revenue performance” in the period.

XP Power said the book-to-bill for 2020 was 1.11, compared to 1.08 for 2019.

Net debt as at 31 December totalled £18m, compared with £41.3m at the end of 2019 and £28.2m on 30 September.

The net debt position benefited from a “strong” cash performance in the fourth quarter, including good working capital management.

XP Power said the recommended dividend for the fourth quarter would be announced with the final results on 2 March, but was not expected to be less than 34p per share, representing a minimum total dividend of 72p per share for the year.

The dividend of 20p per share for the third quarter, announced in October, would be paid on 15 January to shareholders on the register on 11 December.

As the company had previously announced, Duncan Penny stepped down as chief executive officer on 31 December, and Gavin Griggs succeeded him from 1 January.

Penny would remain an executive director and member of the board until the annual general meeting on 20 April.

The board said the search for a new chief financial officer was ongoing, with an appointment to be announced “in due course”.

In the interim period Johan Olivier, currently group finance director, would be acting CFO and a member of the group’s executive leadership team but would not join the board.

“Order intake for the fourth quarter was positive and the group is performing well, despite the challenges created by Covid-19,” the XP Power board said in its statement.

“We therefore expect further underlying revenue growth in 2021.

“Longer term, the group remains well-positioned to continue to deliver growth.”

At 0906 GMT, shares in XP Power were flat at 5,100p.