XP Power Limited
(“XP Power” or “the Group”)
Trading Update
Update to full year 2019 expectations,
2020 outlook unchanged
XP Power, one of the world’s leading developers and
manufacturers of critical power control components to the
electronics industry, is today issuing a trading update for the
period 1 October 2019 to date.
During the period the Group has experienced some short-term
disruption to shipments from the implementation of a new Enterprise
Resource Planning (“ERP”) system, which will result in revenues and
adjusted profit before tax for 2019 being below current market
consensus1. The outlook for 2020 is unchanged
against a backdrop of robust order intake in the fourth quarter to
date.
New ERP System
In our 2018 Annual Report, we announced a project to implement
the latest version of SAP’s ERP software across our entire global
supply chain. Implementation of this new internal system is an
essential step in improving our ability to manage an international
business and supply chain with a highly diverse customer
base.
We planned to transition to the new SAP ERP system with effect
from mid-October. However, during the system migration and in
the first few weeks of operation, we experienced some disruption to
the implementation which led to shipments temporarily falling
behind expected run rates.
Whilst the Group has been shipping at or above normal run rates
from mid-November, it is now expected that the lost revenues will
not be recovered in full by the year end. Depending on our
production and shipment rates during December we estimate that
Group revenues for 2019 could be approximately £6 million below our
previous internal expectations, with our high operational gearing
meaning that adjusted profit before tax for the current year will
also be below existing expectations.
Despite these difficulties experienced in the migration, we are
confident that the new SAP ERP system will deliver significant
long-term benefits to the Group’s ability to run its global
business and supply chain.
Order Intake
Order intake in the first two months of the fourth quarter has
been robust and more than 20% higher than achieved in the same two
months of the prior year. The improvement has been seen across all
of our sectors.
Outlook
As a result of current shipment run-rates now tracking at least
in-line with our expectations, we expect to recover the fourth
quarter revenue shortfall resulting from the ERP system
implementation during the first quarter of 2020.
Notwithstanding this shortterm issue, we are encouraged by a robust
order intake during the first two months of the fourth quarter of
2019 and our expectations for 2020 are unchanged. Given the recent
investments we have made in our supply chain, in engineering
resources to drive new products and the expansion of our
addressable market through acquisition, we remain confident
regarding our long-term strategy for growth.
XP Power will issue a trading update for the year ended
31 December 2019 on 13 January 2020.
1 Company compiled consensus expectations
for revenue and adjusted profit before tax for the year ended
31 December 2019 are £201.4m and
£35.9m, respectively.
- Ends -
XP
Power
Duncan Penny, Chief Executive
Officer +44 (0)118 984 5515
Gavin Griggs, Chief Financial
Officer +44 (0)118 984 5515
Citigate Dewe
Rogerson
+44(0)20 7638 9571
Kevin Smith/Jos Bieneman
Note to editors
XP Power designs and manufactures power controllers, the
essential hardware component in every piece of electrical equipment
that converts power from the electricity grid into the right form
for equipment to function.
XP Power typically designs power control solutions into the end
products of major blue-chip OEMs, with a focus on the Industrial
(circa 47% of sales), Healthcare (circa 24% of sales),
Semiconductor Equipment Manufacturing (circa 18% of sales) and
Technology (circa 11% of sales) sectors. Once designed into a
programme, XP Power has a revenue annuity over the life cycle of
the customer’s product which is typically 5 to 7 years depending on
the industry sector.
XP Power has invested in research and development and its own
manufacturing facilities in China
and Vietnam, to develop a range of
tailored products based on its own intellectual property that
provide its customers with significantly improved functionality and
efficiency.
Headquartered in Singapore and
listed on the Main Market of the London Stock Exchange since 2000,
XP Power serves a global blue-chip customer base from 29 locations
in Europe, North America and Asia.
For further information, please visit xppower.com