XP Power (LON: XPP) says weaker demand has hit customer orders for power products have hit third quarter revenues and the share price has slumped 45% to 1299p. Dividends are being temporarily halted.
Third quarter revenues were 2% lower at £75m. Economic uncertainty in China has reduced demand. Management is trying to reduce costs to offset the lower revenues. The order book is £225m and there has not been a recovery in orders from semiconductor manufacturing equipment companies.
Net debt had been expected to fall this year, but it had risen to £163m by the end of September and it will be even higher at the end of the year. That is partly due to higher spending on the relocation of the Californian facility. Covenant limits are close to being breached. The construction of the Malaysia plant has been suspended.
The second quarter dividend will be paid, but no others will be paid for the 2023 financial year.
Analysts had been expecting a flat 2023 pre-tax profit of around £38m. The operating profit will be similar to last year, but as debt and interest rates are higher pre-tax profit will be lower.
A trading statement will be published on 11 January.