XP Power surges amid exceptionally strong orders in third quarter, unveils CEO succession plans

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XP Power Ltd (LON:XPP) shares surged on Monday as the maker of power control components highlighted an “exceptionally strong order intake” in its third quarter, driven by demand from the semiconductor equipment manufacturing sector.


In a trading update for the three months, the FTSE 250 firm reported revenues of GBP69mln, up 28% year-on-year, while orders were 1% higher at GBP56.3mln. Revenues in the year to date, meanwhile, rose 14% to GBP174.1mln while orders climbed 29% to GBP202.1mln.


Aside from orders in the semiconductor industry, XP Power also said orders in the healthcare sector had returned to normal levels following coronavirus related demand in the first six months of 2020 and that production volumes in its Asian manufacturing facilities have “increased significantly” in the quarter as it ramped up production to meet demand.


The revenue rise was attributed to the company fulfilling what it said was a “sizeable backlog” of health and semiconductor equipment orders received during the first half.


The company added that as a result of the performance and its strong balance sheet, it is proposing a third quarter dividend of 20p per share, equal to last year’s payment.


Looking ahead, XP Power said it has entered its final quarter in a “healthy position” with an order backlog of GBP125.7mln, down from GBP138.2mln at the end of June due to the coronavirus related healthcare demand experienced in the first half and the ongoing cyclical recovery of the semiconductor equipment manufacturing sector. The firm also said they did not expect a repeat of the exceptional demand in its healthcare business from earlier in the year.


For the full year, the company said it expected its performance will be “towards the top end of current analyst expectations” although they remained conscious of potential risks from a second wave of coronavirus and ongoing trade tensions.


“The board remains confident in the long-term market opportunity for the group, supported by the structural growth drivers in the marketplace, and in our ability to capture this opportunity”, the firm added.


CEO succession plans


In a separate announcement, XP Power said its chief executive Duncan Penny has announced plans to step down as CEO on December 31, 2020, and leave the board and the group in April 2021.


Following an executive search process, the company said its current chief financial officer, Gavin Griggs, will succeed Penny as CEO on January 1, 2021, and that a new search as commenced to appoint a new CFO.


“On behalf of the entire XP Power team, I want to thank Duncan for his significant and enduring contribution to our group and wish him well for the future. Duncan joined XP Power as Chief Financial Officer in 2000, becoming CEO in 2003, and has led our business with distinction. He will leave having established a high-quality team, with a broad range of skills, experiences and perspectives which is well placed to take XP Power forward under Gavin’s leadership. The board is confident that Gavin is the right person to take XP Power forward. He is a proven business leader with significant experience and expertise across a variety of growth-oriented business sectors and has worked very closely with Duncan since joining the Group. We look forward to working with Gavin in his new role”, XP Power chairman James Peters said in a statement.


“It has been a great pleasure to work with Duncan, I have learned a great deal from him, and it is an honour to succeed him as CEO. I have confidence in our business model and strategy and am excited about the future prospects for the business”, Griggs added.


Shares in the company were 3.8% higher at 4,880p in early deals.

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