Sparks - XP Power

XP reported Q325 order intake of £55.3m, up 18% y-o-y in constant currency (cc) and up 2% q-o-q cc, noting that progress was strongest from the industrial technology and healthcare sectors as customer destocking slowed.  Q325 revenue of £57.6m was flat y-o-y cc and up 3% q-o-q cc, with Q3 book-to-bill of 0.96x. The order book at the end of Q325 stood at £119.4m,  marginally down from £121.8m at the end of H125. Operating profit increased materially q-o-q and management expects this to be sustained in Q425 to drive full year profit in line with current market expectations (consensus adjusted operating profit for FY25e of £17.4m; H125 £4.8m). Net debt at the end of Q325 was £60.7m, up £2.8m q-o-q due to currency and capex on the new Malaysia production facility. As profit improved in the quarter, gearing reduced by 0.1x to 1.7x and management expects net debt to be lower at year-end in constant currency. The Comet appeal was heard in the US on 19 September, with the verdict from the three appellate judges yet to be received. The company has made good progress in terms of rightsizing the cost base and reducing debt, and with improving end demand, should be well positioned to show better performance in FY26.