Trading at XP Power (XPP), which makes power control components, gathered momentum over the second half of 2016 - and strengthened order intake and revenues have continued into 2017. The reported top line looked rosier due to sterling's decline, but sales still grew by 7 per cent at constant currencies.
Conversely, the gross margin came under pressure as most of the input costs for the group's electronics control components are denominated in US dollars, hence the 200 basis point reduction in the - still admittedly healthy - gross margin of 47.8 per cent. The end result: adjusted full-year earnings up 10 per cent to £22.3m and another hike in the dividend, underpinned by a one-third rise in operating cash flows.
High-efficiency XP Green Power products provide a pointer to future growth channels, with sales up 28 per cent through the period. Management identified the products' reliability, rather than their environmental benefits, as the primary sales catalyst. The strategy is still focused on moving into higher-margin markets. This is borne out the growing turnover from in-house designed products, up 15 per cent at constant currencies to £95.3m, representing a record 73 per cent of total revenues.
Investec gives full-year adjusted pre-tax profits and EPS of £30.4m and 119p, respectively, for 2017, from £28.6m and 115p in 2016.
XP POWER (XPP) | ||||
---|---|---|---|---|
ORD PRICE: | 1,965p | MARKET VALUE: | £377m | |
TOUCH: | 1,940p-1,965p | 12-MONTH HIGH: | 1,985p | LOW: 1,475p |
DIVIDEND YIELD: | 3.6% | PE RATIO: | 18 | |
NET ASSET VALUE: | 553p* | NET CASH: | £3.7m |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2012 | 93.9 | 20.2 | 81.7 | 50 |
2013 | 101 | 22.9 | 95.8 | 55 |
2014 | 101 | 24.3 | 102 | 61 |
2015 | 110 | 25.4 | 104 | 66 |
2016 | 130 | 27.8 | 112 | 71 |
% change | +18 | +9 | +8 | +8 |
Ex-div:16 Mar Payment:21 Apr *Includes intangible assets of £53m, or 276p a share |