XP Power Ltd (LON:XPP), one of the world’s leading developers and manufacturers of critical power control components to the electronics industry, has issued a trading update for the fourth quarter and year ended 31 December 2020.
The Group had a strong finish to 2020 and revenue for the full year was in line with the Board’s expectations. Profit for 2020 is anticipated to be ahead of expectations as the exceptional Healthcare demand led to production efficiency gains and improved gross margins.
Order intake in the fourth quarter continued to be positive, driven by continued demand in the Semiconductor Equipment Manufacturing sector. For the year ended 31 December 2020 order intake was up 20% compared with 2019, including the £15-20 million net increase directly linked to COVID-19 as detailed in the Group’s Q3 Trading Update in October. Revenue in the fourth quarter was up 25% compared with Q4 2019 but as expected, decreased from the record levels seen in Q3 2020 as Healthcare shipments returned to more normal levels following the exceptional COVID-19 related demand in the first half of 2020. Overall revenue for 2020 was up 16% on 2019.
The book to bill ratio, which tracks the relationship between orders received and completed sales, was 0.95 for the fourth quarter (2019: 1.24) reflecting the continued strong revenue performance in the period. The book to bill for 2020 was 1.11 (2019: 1.08).
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Financial Position and dividend
Net debt at 31 December 2020 was £18.0 million, compared with £41.3 million at 31 December 2019 and £28.2 million at 30 September 2020. The net debt position benefited from a strong cash performance in the fourth quarter including good working capital management.
The recommended dividend for the fourth quarter of 2020 will be announced with the 2020 Final Results on 2 March 2021 but is not expected to be less than 34 pence per share, representing a minimum total dividend of 72 pence per share for the year. The dividend of 20 pence per share for the third quarter, announced in October, will be paid on 15 January 2021, to shareholders on the register on 11 December 2020.
CEO and CFO Succession
As previously announced, Duncan Penny stepped down as CEO effective 31 December 2020 and Gavin Griggs succeeded him from 1 January 2021. Duncan will remain an Executive Director and member of the Board until the AGM on 20 April 2021.
The search for a new Chief Financial Officer is ongoing, and an appointment will be announced in due course. In the interim period Johan Olivier, currently Group Finance Director, will be acting CFO and a member of the Group’s Executive Leadership Team but will not join the Board. Johan joined the Company in August 2018 as Group Finance Director, responsible for financial planning and reporting and Treasury and has worked closely with Gavin since then.
Order intake for the fourth quarter was positive and XP Group is performing well, despite the challenges created by COVID-19, and we therefore expect further underlying revenue growth in 2021. Longer term, the Group remains well positioned to continue to deliver growth.