XP Power Ltd on Tuesday described 2023 as ‘a challening year’, with its order intake stagnating despite increased revenue.
The Singapore-based power control systems manufacturer reported a £11.2 million pretax profit for 2023, compared with the prior year’s £30.2 million loss.
However, adjusted pretax profit fell 30% to £26.6 million from £38.0 million. Adjustments included restructuring costs, amortisation of intangible assets, and costs relating to a legal dispute.
Revenue increased 9.0% to £316.4 million from £290.4 million. Order intake, however, decreased 42% to £208.8 million from £362.9 million, while the order book shrank by 38% to £192.0 million from £308.4 million.
XP Power attributed the slower order intake to a cyclical slowdown in the semiconductor industry, and normalising order patterns ‘after two years of unprecedented activity during COVID-19’. It added that shorter delivery lead times have allowed customers to place orders later.
‘2023 was a challenging year for the group,’ said Chief Executive Officer Gavin Griggs. ‘An industry-wide slowdown...combined with greater than expected spending on major capex projects, led to elevated borrowing levels in the second half of the year. We responded by implementing a plan of operational and funding actions to reduce debt levels in the fourth quarter.
‘Whilst the end to the year was disappointing, our leading positions in attractive markets and an improved supply chain performance enabled our order backlog to be delivered, achieving revenue growth for the year as a whole.’
Going forward, XP Power said the slowdown in order intake will affect revenue this year ‘as our order book normalises’. However, it expects trading to improve as 2024 progresses, with its annual performance weighted towards the second half, although Griggs admitted that ‘it is difficult to be precise about the timing of the improvement’.
‘We are confident that our market positions remain strong and that the group remains well positioned to prosper as our key markets resume their trajectory of healthy long-term growth,’ he added.
Shares in XP Power were trading 1.0% higher at 1,052.00 pence on Tuesday afternoon in London.
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