By Elena Vardon
XP Power sees operating profit for 2023 below its views as weaker end-market demand is expected to continue for the rest of the year, and scrapped its dividend payments given current circumstances.
The power-controllers manufacturer now expects operating profit for the year ending Dec. 31 to be broadly in line with the previous year, when it posted an operating loss of 24.1 million pounds ($29.4 million). Adjusted operating profit for 2022 was GBP42.9 million.
It doesn’t intend to pay any more dividends for the year, it said, adding that its second-quarter payout will be paid as planned on Oct. 12. It will restart paying dividends as soon as appropriate, it added.
The London-listed group on Monday said weaker demand, partly driven by economic uncertainty in China, led to worse-than-expected third-quarter performance with customer shipment deferrals into the next year. It sees revenue for the three months ended Sept. 30 at around GBP75 million, a 2% on-year drop on a constant currency basis. It is still delivering double-digit operating margins, it added.
XP Power’s current order book stands at around GBP225 million, it said, adding that customers’ outlook for 2024 and 2025 is encouraging.
The company said its net debt is currently around GBP163 million and it expects it to rise by the end of the year given higher-than-planned capital expenditure on the relocation of its California site, lower-than-expected revenue and profitability and less-than-expected working capital reduction. It is temporarily suspending its new Malaysian site build to save cash and will restart it when the market outlook is clearer, it added.
Write to Elena Vardon at [email protected]
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