Q1 Trading Update

Improved order intake and continued healthy cash generation

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 first quarter ended 31 March 2025.

Trading

Q1 order intake was £57.4m. This is 23% higher than preceding quarter and 30% higher than the comparative period in constant currency. The Group saw a further improvement in demand from the Semiconductor Manufacturing Equipment sector and growth in both the Industrial Technology and Healthcare sectors as inventory in the sales channel moves closer to equilibrium. Some customers brought forward orders previously scheduled for Q2 in response to improving prospects.

Q1 revenue was £53.8m. This was 13% lower than the preceding quarter and 18% lower than the comparative period in constant currency. The reduction was as expected and includes the impact of the previously announced exit from China's Semiconductor Manufacturing Equipment market.

Our order book at the end of the quarter was £124.0m.

Financial Position

Net debt as of 31 March 2025 was £65.4m, £28.1m lower than as of 31 December 2024. Operating cash generation continues to be healthy, with inventory reducing by a further £5.3m to £65.8m. The closing borrowing position also reflects the recent £40m share placing and a surety bond payment for plaintiff's legal fees and interest in the Comet legal case, as previously announced.

Tariffs

US sales of imported products account for c.30% of Group revenue, of which c.20% is imported from Vietnam, c.3% from China and the balance from other Asian countries. Tariffs are calculated with reference to product cost. US sales of domestically manufactured products account for a further c.25% of Group revenue.

The US power supply market is heavily reliant on overseas production, particularly from Asia. Our products are "designed in" to our customers' equipment, with multi-year product life cycles. Power supplies represent a small proportion of the cost of the customers' products and switching supplier is expensive and time-consuming. US tariffs on Chinese imports introduced in 2018 were passed through the supply chain.

We continue to monitor global tariff proposals closely and will respond accordingly. Whilst they may create some short-term market uncertainty, we do not believe they will impact our competitive position.

Outlook

We are encouraged by the improvement in Q1 order intake. Demand from the Semiconductor Manufacturing Equipment sector increased and we were pleased to see some customers in the Industrial Technology and Healthcare sectors placing orders earlier than expected as channel inventory normalises.

However, we remain mindful of geopolitical uncertainty. It is too early to tell what impact, if any, tariffs will have on our markets in the short-term, albeit we do not believe they will impact our competitive position. The range of potential outcomes for 2025 remains wide.

The Board remains confident in the Group's long-term prospects. We have leading positions in attractive end markets and have a strong pipeline of both new products and new business, supporting medium-term growth. This should deliver significant performance improvement when markets recover.

XP Power designs power control solutions into the end products of major blue-chip OEMs, with a focus on the Semiconductor Manufacturing Equipment (circa 38% of sales), Industrial Technology (circa 38% of sales) and Healthcare (circa 24% 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 five to seven years depending on the industry sector. XP Power has invested in research and development and its own manufacturing facilities in Vietnam, China, North America and Germany, to develop a range of tailored products based on its own intellectual property that provide its customers with significantly improved functionality and efficiency.