XP Power books lower first half profits

XP Power books lower first half profits

Critical power control solutions provider XP Power Ltd. (LON: XPP) saw their first half profits down on a year-on-year basis. The Company said the dampened profits owed to tough market and trading conditions.

Revenues were up 6% from £93.2 million to £98.9 million on-year for the first half and correspondingly, interim dividend per share also rose 6% from 33.0p to 35.0p.

Despite this, order intake was down 1% year-on-year for the first half, to £100.6 million, and adjusted operating profit dropped 12% from £20.7 million to £18.2 million. Further, the Group’s gross margin fell 210bps to 44.% and adjusted diluted earnings per share fell 17% during the same period, to 69.2p a share.

XP Power comments

James Peters, Chairman, stated,

“Our results for the first half reflect tougher trading conditions in the second quarter.  While growth in our Healthcare, Industrial and Technology markets remained robust, this was offset by a cyclical slowdown in the Semiconductor Equipment Manufacturing market and pressure on gross margins, resulting from the increase in USA trade tariffs on Chinese manufactured goods, historic component price inflation and product mix.”

“Notwithstanding these current headwinds, we continue to win new design slots at our key customers and to take market share. We benefit from a broad customer base as demonstrated by the resilience of our Industrial, Healthcare and Technology sector performance. We are well positioned to take further share and will benefit from any recovery in the Semiconductor Equipment Manufacturing sector. While we remain mindful of potential short-term risks and macroeconomic challenges, we continue to expect an improved revenue performance in the second half of the year as a result of the increase in our order book since the year end.  With a proven strategy, strong design win momentum and an expanded product portfolio, the Board remains positive regarding the future of the Group.”

Investor notes

After recovering from their early morning drop, the Company’s shares have now dipped 0.49% or 10.00p to 2,030.00p a share 01/08/19 13:39 BST. Peel Hunt analysts retained their ‘Buy’ stance on XP Power stock. The Group’s p/e ratio stands at 11.58 and their dividend yield is 4.23%.

Other energy sector updates have come from; AFC Energy plc (LON: AFC), Nostrum Oil and Gas PLC (LON: NOG), John Laing Environmental Assets Group Ltd PLC (LON: JLEN) and Reabold Resources PLC(LON: RBD).