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Investing.com -- Shares of XP (NASDAQ:XP) Power fell by 4.7% today as the company reported a significant decline in its full-year 2024 (FY24) revenue and earnings before interest, taxes, and amortization (EBITA).
The results, which were in line with the company’s pre-announcement, showed a year-on-year (YoY) revenue drop of 22% to £247 million, with organic revenue down 20%. The decline was felt across all end markets, with Semiconductor revenue decreasing 5%, Industrial Technology down 28%, and Healthcare sliding 24%, all on a constant currency (CC) basis.
EBITA for FY24 came in at £25.1 million, at the lower end of the previously provided analyst range of £25.1 million to £27.6 million, and represented a 32% YoY decrease on a CC basis. The EBITA margin contracted by 190 basis points to 10.1%, indicating a more pronounced second-half margin of 9.7%.
Adjusted earnings per share (EPS) were also down, showing a 48% YoY decline at 42.9p. Net debt was reported at £93.5 million, resulting in a net debt to EBITDA ratio of 2.3 times, or 2.65 times when including the legal fees related to the COMET lawsuit.
In an effort to "proactively strengthen" its capital structure amidst these challenges, management announced a £40 million share placing. The company’s outlook remains cautious, with guidance for the first half of fiscal year 2025 (1H25F) predicting weaker sequential performance.
This outlook is attributed to ongoing market difficulties and U.S. trade restrictions impacting Semiconductor Manufacturing Equipment sales in China. While an improvement in demand is expected throughout FY25F, management notes that the timing and extent of recovery are difficult to predict.
Analysts have weighed in on the update, with Jefferies commenting on the market’s reaction to the news. "XP Power’s update this morning likely surprised the market, even with lowered expectations. Not only is the group not guiding to a recovery in 1H25F, it is indicating that results will be sequentially lower, at least a part of which is down to export licence issues relating to its Chinese semiconductor exposure, presumably alongside further de-stocking," stated Jefferies.
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