XP Power Limited (XPP) Earnings Call Transcript & Summary

Yes. As I said, it was a solid half performance, and that was on the back of a solid second half last year. So we've had 4 quarters of good performance. And it just gives us some good encouragement going forward. Our strategy is working. We're delivering to our customers, and I think things are getting better. We're working against some challenges. The supply chain performance has improved, but there's still issues within it. So it's not -- we're not completely through it. But as you can see by our performance, things are getting better.

With us around the globe now because you're very much a global operation. Just talk us through some of the headlines in the different parts of the world where you operate.

So North America, good growth in all parts of their business in semiconductor industry, in the industrial tech and in health care and having ongoing new wins in all parts of that business. So we're very encouraged by North America. Europe, things are improving. It's mixed between different countries, strong performance in Germany, slightly weaker in the U.K. We have signed a new distributor who will come to market in the second half, and that's increasing our feet on the ground. Then Asia, we have had challenges in Asia. China semiconductor industry has slowed down considerably as the sanctions and controls the U.S. has put in place have impacted them. But medium term, we're still very positive about it, but it's going through some challenges at the moment.

And Germany, just talk me through the operation there because we visited there recently, and it certainly looks to be a very impressive facility.

Yes. So we've got 3 sites, key sites in Germany, the Bremen facility, which has always been our low voltage hub and then the 2 businesses we acquired in Southern Germany at the beginning of 2022. There's FUG and GUTH. So FUG just outside Munich, has been performing very well. That's a high precision, high voltage, high power business in many interesting applications. There's a lot of investment in that site. There's a lot of customers talking to us about new innovation we can do, and it's really cutting-edge stuff in the high-voltage area.

And of course, Gavin, you can't talk about a serious company these days without mentioning ESG.

Yes, ESG, as you know, has been part of our DNA for many, many years, and we've made further progress in 2023. We've signed up to the science-based target initiative. And also today, we've also published our first transition report, which is our route and what we're going to do to be net zero by 2040.

Back to you, David. Let's -- I know you're obviously restricted within stock exchange regulations, but before the new CFO arrives, let's hear from you on looking ahead for the next 6 months or even a year. What can people expect in the financials?

Well, I think as we've said, we're really pleased with where the first half has come out, it's broadly in line with our expectations. And I think as we look forward to the full year, our expectations remain largely unchanged. We've guided to a modest second half weighting, and I think we would stick with that for the full year.

Great. Gavin, final look ahead, what can people expect to see going forward? Hopefully, sort of, as you said, an easing up in some of these supply problems?

Yes. I think in the medium-term, we're very, very excited about the opportunity ahead of us. All 3 sectors are very attractive to us. There's -- all driven by a number of mega trends that we're seeing. There's the growth in electrical usage, all products now need a power converter. There's the whole digital transformation of the globe and then the long-term trends in health care all benefit XP Power's medium-term future. And so we're very positive about it.

AI is that a...

AI is a big trend where a lot of the products we supply customers who made chips who they will benefit from AI. So indirectly, we will directly benefit from it. Yes. So there's -- but there's other exciting trends in there, electric vehicles, the Internet of Things, big data, all of these trends just drive demand for semiconductors and then in turn, for the equipment that makes the semiconductors, which is what the customers we supply.

But hopefully, they won't replace us anyway. Gavin, David, thank you very much. That's the 6-month interim report, financial report and also the general look at the company from XP Power.