XP Power Interim Results: Orders Surge as H2 Growth Builds

XP Power Limited has reported a sharp recovery in customer demand during the first half of 2026, while leaving its full-year expectations unchanged.

The headline number is order intake of £167.2 million, up 55% year-on-year in constant currency and 48% compared with the preceding half. That demand has yet to flow fully into reported revenue, but it gives the power-control specialist much better visibility for the remainder of the year.

The investment case now rests on XP Power's ability to turn this expanded order book into revenue without losing the margin improvements delivered through restructuring and manufacturing changes.

XP Power's key interim figures

Metric	H1 2026	H1 2025	Change
Order intake	£167.2 million	£112.7 million	55% higher in constant currency
Revenue	£109.1 million	£110.9 million	2% lower reported, 2% higher in constant currency
Book-to-bill	1.53x	1.02x	Highest since H1 2022
Adjusted gross margin	45.9%	41.4%	Up 450 basis points
Adjusted operating profit	£8.6 million	£4.8 million	Up 79% reported
Adjusted operating margin	7.9%	4.3%	Up 3.6 percentage points
Statutory profit before tax	£2.0 million	£1.4 million loss	Returned to profit
Net debt	£47.7 million	£57.9 million	Down 18% year-on-year
Leverage	1.3x	1.8x	Improved year-on-year

Investors can read the original company announcement for the full accounts and accompanying notes.

Orders are the main attraction

XP Power's first-half revenue was broadly flat, but its order performance tells a more encouraging story.

Order intake increased from £112.7 million to £167.2 million, with sequential progress from £79.1 million in the first quarter to £88.1 million in the second. All sectors improved, while the total order book reached £173.9 million, up from £121.8 million a year earlier.

The book-to-bill ratio was 1.53x. This compares the value of new orders received with revenue recognised during the period. A figure above one means orders are entering the business faster than they are being converted into sales.

XP Power has £135 million of firm orders scheduled for delivery during the second half. That supports management's expectation of robust H2 revenue growth, although some semiconductor customers appear to be ordering earlier than usual. Consequently, part of the order intake will be delivered in later periods rather than during 2026.

Semiconductor demand leads the recovery

Semiconductor Manufacturing Equipment produced the strongest order growth. Sector order intake reached £79.9 million, up 116% in constant currency, with a record book-to-bill ratio of 1.81x.

Management attributed this to increased spending on wafer fabrication equipment, including demand linked to leading-edge logic and High Bandwidth Memory applications. XP Power also reported strong demand for technology solutions and indications that it is gaining share in strategically important high-voltage, high-power applications.

Semiconductor revenue was £44.1 million, up 5% in constant currency despite the loss of sales following XP Power's exit from the Chinese semiconductor market.

Industrial Technology also improved. Revenue increased 9% in constant currency to £44.6 million, while orders reached £59.5 million and book-to-bill stood at 1.33x. Management believes customer destocking has concluded, with particularly strong distributor demand in the US.

Healthcare remained the weakest area. Revenue fell 13% in constant currency to £20.4 million, although order intake improved to £27.8 million and book-to-bill recovered to 1.36x. XP Power expects revenue in this sector to improve during the second half.

Margin recovery is translating into profit

The strongest part of the reported financial performance was the improvement in profitability despite limited revenue growth.

Adjusted gross margin rose by 450 basis points to 45.9%, exceeding the company's initial objective of returning to the mid-40s. Adjusted operating profit climbed 79% to £8.6 million, lifting the adjusted operating margin from 4.3% to 7.9%.

The improvement reflected factory overhead savings following the closure of the China facility, product cost reductions, a transfer of some US production to Vietnam and a more favourable sales mix. Adjusted operating expenses were broadly flat on a reported basis, although they increased 10% in constant currency, mainly because of higher variable pay and accounting changes affecting product development costs.

Statutory operating profit more than doubled to £5.3 million. Statutory profit before tax was £2.0 million, reversing the £1.4 million loss reported in H1 2025.

This shows that the 2025 restructuring actions are having a meaningful effect. However, the adjusted operating margin remains some distance below XP Power's through-cycle target of approximately 20%.

Converting orders into output is the next test

The enlarged order book creates an opportunity, but it also raises the operational pressure.

XP Power is rapidly increasing production capacity in Vietnam, where headcount grew during the first half. Its new Malaysian facility is scheduled to begin full production in the fourth quarter of 2026.

Management was clear that the pace of manufacturing expansion, particularly in Vietnam, will be a key determinant of full-year revenue. Scaling production rapidly can temporarily reduce efficiency, while the company also expects some component cost inflation as the global electronics supply chain tightens.

Inventory rose from £57.0 million at the end of 2025 to £73.8 million at 30 June 2026. This included additional raw materials and semi-finished goods intended to support second-half deliveries.

That investment weakened near-term cash generation. Adjusted operating cash flow fell 40% to £8.4 million and free cash flow was negative £7.6 million, reflecting higher working capital and spending on manufacturing capacity.

Debt is manageable, but there is still no dividend

Net debt was £47.7 million at the half-year, down from £57.9 million a year earlier but up from £41.5 million at the end of 2025.

Net debt represented 1.3 times adjusted EBITDA for the trailing 12 months, comfortably within the banking covenant ceiling of 3.0 times. Total liquidity was £48.7 million, and XP Power expects leverage to reduce towards 1.0 times by year-end.

The company declared no interim dividend. Payments have been suspended since late 2023, with debt reduction continuing to take priority. Management said dividends could be reinstated once leverage returns to the long-term target range of zero to one times adjusted EBITDA, but no timetable was disclosed.

What investors should watch in the second half

The order recovery, stronger gross margin and lower year-on-year debt are clear positives. Demand is broad-based across sectors and regions, while £135 million of firm H2 orders gives XP Power unusually strong near-term revenue visibility.

The main challenge is execution. The company must expand manufacturing output quickly, manage tighter component markets and protect margins while absorbing higher volumes. Healthcare revenue remains soft, free cash flow was negative and the dividend is still suspended.

There is also continuing legal uncertainty surrounding the Comet case. The earlier US court judgment and associated damages were vacated, with the case sent back for a new trial. XP Power retained its existing provision and has assumed no cash benefit from the potential release of the related bond when setting its leverage expectations.

For now, unchanged full-year expectations suggest management believes the recovery is proceeding to plan. The second half should reveal whether XP Power can convert its strongest order momentum since 2022 into the revenue, cash flow and further margin expansion investors will want to see.