XP Power (XPP) H1 2025 earnings summary

Executive summary

• Order intake rose 31% year-over-year and 19% sequentially, with book-to-bill above one for the first time since late 2022, signaling early recovery as destocking ends in key sectors.

• Revenue declined 11% year-over-year in constant currency to £110.9m, mainly due to customer destocking and China Semi exit, but improved 12% sequentially from Q1 to Q2.

• Adjusted gross margin improved by 80bps to 41.4%, driven by cost and supply chain efficiencies.

• Net debt reduced to £57.9m, supported by a successful share placing and strong operating cash flow.

• Strategy centers on organic growth, innovation, and customer-specific solutions, with new product launches and a strong pipeline supporting future growth.

Financial highlights

• Order intake: £112.7m, up 31% year-over-year in constant currency.

• Adjusted operating profit was £4.8m, impacted by one-off currency headwinds; adjusted diluted EPS dropped to 0.4p.

• Adjusted cash conversion was strong at 290%, aided by a 16% inventory reduction.

• Net debt at period end was £57.9m, leverage at 1.8x, and adjusted LTM EBITDA was £32.4m.

• CapEx for the year projected at around £20m, focused on product development and new facilities.

Outlook and guidance

• Expect a stronger H2 2025 as recovery continues, but precise timing of full recovery remains uncertain due to macroeconomic and trade factors.

• Sequential revenue growth expected in H2, with 50%-60% drop-through to profit.

• Full-year tax rate expected at 30%, with further profit growth anticipated to lower the rate.

• Board expects continued deleveraging and no dividends until net debt approaches target leverage of 0-1x adjusted EBITDA.

• Efficiency actions taken in H1 will support sequential progress in H2 and into 2026; full-year outcome depends on Q4 order book.