XP Power Ltd Trading Update

 
TIDMXPP 
 
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 GBP6 
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 GBP201.4m and GBP35.9m, 
respectively. 
 
                                   - Ends - 
 
XP Power 
 
Duncan Penny, Chief Executive Officer    [phone] 
 
Gavin Griggs, Chief Financial Officer [phone] 
 
Citigate Dewe Rogerson              [phone] 
 
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 
 
 
 
END 
 

(END) Dow Jones Newswires

December 10, 2019 02:00 ET (07:00 GMT)