XP Power LON: XPP reported sharply higher first-half order intake and improved profitability as demand recovered across its semiconductor, industrial technology and healthcare markets, while the company maintained its full-year expectations.
Order intake reached £167.2 million, up almost 55% year over year at constant currency and 48% sequentially, according to the company. Revenue rose 2% at constant currency to £109.1 million, with growth restrained by the expiry of U.S. export licenses governing RF sales into China and by a weaker U.S. dollar at reported exchange rates.
Chief Executive Gavin Griggs said the recovery had been broad-based across sectors and regions, though semiconductor manufacturing equipment was particularly strong as customers began investing for what the company expects to be a multi-year wafer-fabrication expansion cycle.
Margins and Profit Return to Growth
Adjusted gross margin increased by 450 basis points to 45.9%, which Finance Director Matt said returned the company to the mid-40% range it had previously targeted. The improvement reflected the closure of XP Power’s China factory, restructuring actions undertaken in the first half of 2025, product cost savings, and improved pricing and sales mix, particularly in North America and Europe.
Adjusted operating profit rose 23% at constant currency to £8.6 million, while adjusted operating margin improved by 360 basis points to 7.9%. Adjusted diluted earnings per share increased to £0.142 from £0.004 a year earlier.
On a statutory basis, XP Power recorded profit of £1.1 million for the period, compared with a £1.8 million loss in the prior-year half. Adjusting items primarily related to the China factory closure, the company’s decision to exit the RF market, interest-rate swap movements and commissioning costs for its new Malaysia plant.
Net financing expense fell 13% to £3.5 million, aided by lower interest rates and lower average borrowings. The company said it swapped most of its borrowings to fixed interest rates during the period. Its first-half effective tax rate was 20%.
Semiconductor Orders More Than Double
Semiconductor manufacturing equipment orders increased 116%, producing a record book-to-bill ratio of 1.81 for the sector. Management attributed the gain to both market recovery and business wins across applications including etch, deposition, ion implant and inspection.
Griggs said XP Power had also gained additional share with certain customers after a competitor in the high-voltage market experienced a business continuity issue during the first quarter. He said customer lead times in the semiconductor segment were generally in the five- to six-month range and had extended somewhat in the second quarter.
Industrial technology orders rose 22%, while healthcare orders increased 25%, which management said indicated that destocking had ended in those markets. For the group, book-to-bill was 1.53.
Industrial technology revenue rose 9% at constant currency, supported by demand through distribution channels. Healthcare revenue declined 13%, reflecting the timing of specific programs in XP Power’s smallest sector, though the company expects that segment to return to growth in the second half. Revenue in Asia declined 11%, primarily because of XP Power’s exit from the China semiconductor market, while North America and Europe grew 3% and 6%, respectively, at constant currency.
Order Book Supports Second-Half Growth
The company said its order book had expanded to £174 million and included £135 million of firm orders scheduled for delivery in the second half. XP Power said this supports second-half revenue of at least £135 million, compared with £109 million in the first half, and full-year revenue of at least £244 million, subject to prevailing tariffs.
Matt said tariffs could affect revenue but not profit. The final revenue outcome will largely depend on the company’s ability to expand production capacity and convert orders into shipments, as supply chains are tighter than they were a year ago.
XP Power increased inventory by 29% to £73.8 million, focusing on high-use components required for planned second-half deliveries. It generated £8.4 million of operating cash from adjusted EBITDA of £16.3 million. Operating cash conversion was 52% under a revised definition based on EBITDA rather than operating profit.
The company changed its medium-term operating cash conversion target to about 85% of EBITDA, saying the revision aligns its reporting with listed peers and does not alter its underlying cash-generation ambition.
Capacity Investment and Balance Sheet Plans
Net capital expenditure totaled £10.1 million during the first half, including the bulk of remaining construction payments for the Malaysia facility and capacity expansion in Vietnam. The Malaysia project was completed on budget at a total cost of £20 million, with full production expected to begin in the fourth quarter.
XP Power invested £2.7 million in production capacity in the half, split between £1.6 million in Vietnam and £1.1 million in Malaysia. It aims to raise Asian manufacturing line capacity by about 75% compared with the first half. Griggs said the company recruited and trained more than 1,200 new staff in Vietnam during the second quarter.
Net debt rose by £6.2 million to £47.7 million, equivalent to leverage of 1.3 times EBITDA. Management expects leverage to approach one times by year-end and said it intends to reinstate the dividend once leverage is structurally below one times EBITDA across the cycle. At that point, the company may also consider additional shareholder returns and potential acquisitions.
For 2026, XP Power expects total capital spending, including capitalized product development costs, of £25 million to £30 million and an effective tax rate of 20% to 25%. Management said its full-year expectations were unchanged, supported by the order book and planned capacity expansion.
About XP Power (LON:XPP)
XP Power Limited, an investment holding company, designs, manufactures, and sells power supply solutions in Europe, North America, and Asia. The company offers AC-DC power supplies, DC-DC converters, high voltage AC-DC power supplies, high voltage DC-DC converters, RF power systems, EMI filters, custom power supplies, and 3 phase power supplies. It also provides engineering services. The company serves healthcare, industrial technology, and semiconductor equipment manufacturing industries. XP Power Limited was founded in 1988 and is based in Singapore.
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