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XP Power: Increasing Complexity Drives Growth

Published 03/01/2018, 06:56 AM

Strong demand across all markets and geographies, combined with market share gains and the recent Comdel acquisition, have resulted in record revenues and earnings for XP Power Ltd (LON:XPP) in FY17. Expanding its product range to include high voltage and RF power solutions has widened the company’s addressable market and gives XP the opportunity to support its customers in the development of more complex solutions. With strong cash flow generation and access to debt, XP has the resources to fund growth, whether through internal product development or via acquisition.

XP Power

FY17 – a record year: Revenues +29%, EPS +27%

XP started to see an improvement in demand from the markets it serves from Q316 and this accelerated through the course of 2017. Revenues were further boosted by market share gains in healthcare, a stronger dollar and the Comdel acquisition in Q417. This resulted in record revenues and order intake, which translated into record earnings. Despite borrowing to fund the $25m acquisition of Comdel, XP’s net debt/adjusted EBITDA ratio stood at only 0.22x at year-end. The company has made good progress in moving its product portfolio up the power range and into more technically complex applications. It is focused on winning more designs with higher engineering solutions content, where its ability to support customers through the design process gives it an advantage over lower-cost Asian producers. Expansion of the Vietnam facility is on track and it should start production by the end of 2018, supporting volume growth.

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