XP Power, which makes power control components for the electronics industry, has reported, as expected, a decline in first half revenues, the result of a weakened order book.
Profit after tax for the year came in at £9.6m (2011: £11.9m) on revenues of £46.5m (2011: £51.9m), pushing the gross margin from £25.7m to £21.8m. This was due to weaker order intake in the latter part of 2011 as industrial electronics demand softened in response to a weaker macroeconomic outlook.
Gross margin was reduced to 46.9% (2011: 49.5%) due to a combination of Vietnam start-up costs and lower factory loading, the firm said.
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More positively, it has expanded its own-design products, which now account for 61% of revenues (2011: 55%) and second half revenues and earnings are expected to be substantially higher than those achieved in the first half of the current year.
Chairman Larry Tracey said: "First half revenues declined as expected following the weaker order intake reported during the second half of the previous financial year. The combination of subdued industrial electronics demand, the start-up costs associated with our Vietnamese manufacturing facility and lower factory loading, have combined to produce a reduction in earnings in the first half of 2012 versus the same period a year ago.
"Whilst the global trading environment is challenging, we are adapting our resource allocation to fit the current market conditions. Looking ahead, we expect that the on-going implementation of our strategy of vertical integration in designing and manufacturing our own products, targeted at servicing the power supply needs of industry leading customers, continues to position the group well for long term earnings growth."
NR
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