XP Power order intake reaches record in first half

(Sharecast News) - XP Power reported a record order intake in its first half on Monday, up 17% at constant currency and 8% on a reported basis, to £157.6m.
The FTSE 250 company said that growth was driven by continued strength in the semiconductor manufacturing equipment sector and a recovery in industrial technology, offset by an expected normalisation in healthcare after an "exceptional" Covid-19-related performance in 2020.

It said it was entering the second half with a record order book of £150.3m, up from £124.1m at the end of the 2020 financial year.

Constant currency revenue grew 23% in the six months ended 30 June, with reported revenue up 14% to £119.9m, while the firm's gross margin increased to 46.6% from 44.9% year-on-year, driven by a "favourable" sector and product mix as well as cost savings from the transfer of manufacturing to Asia following the closure of the Nevada site in mid-2020, partially offset by increased freight costs.

Adjusted cash generated from operations grew 3% to £26.4m, despite the company investing in working capital to support customer demand and to secure supply of crucial components, while XP maintained high operating cash conversion of over 100%.

Net debt totalled £20.3m at period end, widening from £17.9m at the end of December, with net debt-to-EBITDA standing at 0.3x, and the company having "significant" liquidity available at £87m.

The board declared a first half dividend of 37p per share, up from 18p year-on-year, with the comparative period impacted by Covid-19.

It said the payment reflected the confidence the board had in the group's longer-term prospects.

The directors said they expected 2021 full-year trading to be "modestly ahead" of analysts' consensus expectations, while remaining mindful of certain headwinds.

"We maintained our strong momentum in the first half, building on our robust performance in 2020 to deliver another period of significant revenue and profit growth," said chairman James Peters.

"Our progress reflects the consistent application of our strategy, and we continue to see a positive future for the group driven by encouraging market growth dynamics, exposure to secular growth trends related to big data, artificial intelligence, the internet of things and the fourth industrial revolution, and the potential for further market share gains as we broaden our addressable market and product range."

Peters said trading in the period was ahead of the company's original expectations, reflecting continued strength of the semiconductor manufacturing equipment sector and a recovery in industrial technology.

"We expect the momentum to continue, supported by our strong order book, and while mindful of headwinds including price and availability pressures within the component supply chain, the hoard expects full year trading to be modestly ahead of current analyst consensus."

At 0939 BST, shares in XP Power were up 1.44% at 5,213.84p.