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FOR IMMEDIATE RELEASE.
16 February 2024
(`XP Power' or `the Group' or `the Company')
Trading update - initial view on 2024 outlook
2024 outlook
The Board has concluded that there is likely to be a shortfall in revenue in 2024, leaving the outlook for 2024 significantly below market expectations. This is based on recent order intake, revenue performance and discussions with customers, particularly within the Healthcare and Industrial Technology sectors, which confirm unusual, temporarily soft demand conditions and destocking. These softer trends have also emerged within our direct industry peers.
In early 2024, we have seen, as expected, the continuation of the ongoing cyclical slowdown in the Semiconductor Manufacturing Equipment sector and we continue to expect conditions in this sector to improve as the year progresses.
We now expect to also see a slowdown in the Industrial Technology and Healthcare sales, driven particularly by customer inventory movements. These markets are not typically cyclical for us. The slowdown in 2024 is driven by customer stock movements as they reduce their inventory in response to shorter delivery lead times.
In general, we expect the weakness we are currently seeing to be relatively short lived and indeed there have been some more encouraging signals from certain customers, especially for 2025, in recent weeks. The timing and speed of the recovery is hard to predict however. We expect 2024 to be significantly second half weighted with an improvement in trading as the year progresses.
Cost savings
As outlined in January, the cost savings actions previously announced remain on track and the Group has identified additional savings that will be delivered in the first quarter. These combined actions will significantly lower overheads year-on-year while preserving capability to respond to the recovery when it comes.
Balance sheet
The Group's cash generation toward the end of 2023 was ahead of expectations, as reflected in the year-end net debt position of £112.7m, and we expect this to continue in 2024 with net debt below our prior assumption. A trading performance in line with the Board's expectations would leave net debt/EBITDA at
2023 full year results
Our year-end financial close processes have identified some capitalised product development costs that needed to be amortised or impaired, adding £4 million to costs. This is a non-cash item. Approximately half of this is one-off in nature. Underlying operating profit for full year 2023 absent these costs was in line with our expectations.
The Group will announce its results for the year ended
Medium term outlook
The Board remains confident that the Group has strong medium-term prospects, and significant value, underpinned by our leading market position and broad product portfolio .
Enquiries:
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