High-yield XP Power still a winner

While XP has seen a little weakness in industrial markets, where it generates about two-fifths of its turnover, the group posted record order intake and revenue growth in the year to December 2015 thanks to its focus on niche products.

A shift from distributing to manufacturing means the engineer now relies less on third-parties and maintains control over supply chains. In 2015, 68 per cent of sales came from products designed in-house. This has helped the group to boost operating margin as well as attract new blue-chip customers by offering a wider array of custom built, niche products capable of meeting different needs. The control XP has over its products coupled with high levels of customer service is also helping it outfox competitor and grow market share in a fragmented industry.

Designing and developing its own kit has allowed XP to move quickly into lucrative areas of the market such as "green" power products, which experienced 27 per cent growth last year and accounted for 22 per cent of sales. Such products are in hot demand across XP's three divisions as laws in various countries force manufacturers to reduce power wastage, improve recyclability and abolish the use of harmful chemicals. According to boss Duncan Penny, reliability is also a key selling point as these more efficient power supplies don't require fans; the component that often cause devices to malfunction.

The company is also benefiting from the emergence of alternative technologies such as LED lighting and solar power generation, which each require XP's high-tech power converter devices, and an ageing population forcing hospitals to up their game. The latter trend helped the engineer's healthcare unit, which accounts for 31 per cent of sales, deliver 11 per cent growth n 2015.

At 28 per cent, sales growth was even better at the technology division, which contributed almost quarter last year's revenue. In spite of the well-documented difficulties faced by semiconductor companies, management reckons its customers are now spending again as they develop the next generation of phones and tablets. The internet of things phenomenon was credited as another major source of success.

And while weak North American markets have weighed on the industrial arm's performance, a 1 per cent decline in turnover in 2015 wasn't too shabby, either. The division's performance was helped by 6 per cent growth in Europe as the weak euro currency helped customers to become more competitive. Despite current concerns over the state of the economy there, management claims that this positive momentum shows no sign of slowing.