XP Power Exits RF Market and Completes Malaysia Factory in Strategic Overhaul

XP Power’s 2025 Trading: Orders Rebound, Revenue Dips, Second Half Improves

XP Power has delivered a solid end to 2025, with order momentum returning and full-year profit and EPS expected to land in line with market expectations. The headline is a deliberate reshaping of the business: an orderly exit from the RF (radio frequency) market, the closure of its China factory, and a new Malaysia facility now built and slated to go live in 2026.

For investors, the picture is one of improving demand, a tighter focus on higher-return product lines, and a balance sheet that finished the year stronger. The near-term trade-off is lower reported revenue and some execution risk as the company transitions its manufacturing footprint and winds down RF.

Key Q4 and Full-Year Numbers to Know

	Q4 2025	Q4 2024	Change	Change (constant currency)
Order intake	£57.9m	£44.9m	+29%	+32%
Revenue	£61.2m	£60.0m	+2%	+5%
Book-to-bill	0.95x	0.75x	+0.20x	–

	FY 2025	FY 2024	Change	Change (constant currency)
Order intake	£225.9m	£181.6m	+24%	+28%
Revenue	£229.7m	£247.3m	(7)%	(4)%
Book-to-bill	0.98x	0.73x	+0.25x	–

Order book at year-end: £116.1m.

Book-to-bill explained: it is orders received divided by revenue shipped. Below 1.0x means the order book is being drawn down; above 1.0x means the backlog is building. XP sat at 0.95x in Q4 and 0.98x for the year – much improved on 2024, but not yet rebuilding backlog.

Profit Guidance: In Line With Expectations

Subject to audit, the Board expects full-year profit and EPS to be in line with current market expectations after a “significantly improved” second half. Company-compiled consensus as of 19 January 2026 sits at:

Metric	2025 consensus	Range
Adjusted operating profit	£17.3m	£16.3m to £18.2m
Adjusted EPS	21.4p	16.6p to 24.4p

Landing in line here matters. It suggests the early-cycle recovery in orders and the self-help measures (cost control and mix) are translating into earnings, even as annual revenue fell 7%.

Strategic Call: Managed Exit From the RF Market

XP is exiting RF over roughly three years. Why? The RF Division has historically delivered gross margins and returns materially below the Group average. On top of that, US export controls introduced in late 2024 block sales of RF products to key customers in China after 2025, limiting future prospects.

The exit will be carefully managed to support customers and protect broader relationships. Final delivery schedules are agreed, and XP has already received a £16.4m prepayment in December 2025 from a key customer toward 2026 deliveries.

RF Division snapshot (2025)	Detail
Revenue	£24.3m
Profitability	Close to break-even (benefiting from final China deliveries)
Outlook during wind down	Annual revenue expected to be similar over the c.3-year period
Prepayment received	£16.4m in December 2025 for 2026 deliveries

My take: strategically positive. Exiting a structurally lower-return segment should lift Group quality over time and allocate capital to stronger franchises across Semiconductor Manufacturing Equipment, Industrial Technology, and Healthcare. The caveat is transitional noise – revenue from RF lingers but margins are thin, and the prepayment flatters year-end net debt.

Manufacturing Shift: China Closure, Malaysia Facility Complete

Construction of the new Malaysia factory is complete and expected to be operational during 2026. The Kunshan, China facility closed in December 2025. Management highlights that Malaysia improves flexibility to serve global markets, particularly the US, which is strategically sensible given supply-chain diversification and geopolitics.

XP says it has adequate spare manufacturing capacity elsewhere to manage the transition from China to Malaysia. That reduces near-term disruption risk, but investors should watch the ramp timeline, costs, and any temporary margin friction as the new site comes online. Detailed costs of the closure and set-up are not disclosed at this stage.

Balance Sheet and Liquidity: Cleaner Finish to 2025

Metric	31 Dec 2025	Comment
Net debt	£41.6m	Down £19.1m vs 30 Sep 2025, helped by the £16.4m RF prepayment
Leverage	c.1.2x	Comfortable level

It is a healthier exit rate. Just remember the prepayment is not recurring and will reverse as the product is delivered in 2026. Nevertheless, leverage at around 1.2x gives room to execute the transition plan.

End-Market Mix and Demand Signals

XP’s core exposure remains diversified: Semiconductor Manufacturing Equipment (c.39% of H1 2025 sales), Industrial Technology (c.38%), and Healthcare (c.22%). The quarterly cadence shows steady order intake throughout 2025, with Q4 up 32% in constant currency and revenue up 5% – an encouraging sign that customers are moving from destock to reorder.

	Q1	Q2	Q3	Q4	FY
Order intake (£m)	57.4	55.3	55.3	57.9	225.9
Revenue (£m)	53.8	57.1	57.6	61.2	229.7
Book-to-bill	1.07x	0.97x	0.96x	0.95x	0.98x

The year-end order book of £116.1m provides visibility into early 2026, but with book-to-bill just under 1.0x, investors should watch whether orders continue to outpace shipments as the cycle improves.

Why It Matters: My Bull and Bear Takeaways

Bull points

• Order intake growth is back (+24% for FY; +32% in Q4 constant currency), signalling healthier demand.
• Profit and EPS expected in line with consensus after a stronger H2 – execution is improving.
• Exiting RF should lift Group quality and focus capital on higher-return segments.
• Manufacturing pivot to Malaysia supports resilience and access to US customers.
• Leverage around 1.2x gives financial headroom.

Bear points

• Revenue down 7% for the year and book-to-bill below 1.0x means backlog is not yet rebuilding.
• RF wind down carries operational complexity, and near-term revenue is low-margin.
• China closure and Malaysia start-up costs are not disclosed; margin effects during ramp are a watch-out.
• Net debt flattered by a £16.4m prepayment that unwinds as deliveries are made in 2026.

What to Watch Next

• 3 March 2026 full-year results – look for detail on RF exit costs, China closure impacts, and Malaysia ramp timing.
• Gross margin progression as mix shifts away from RF and Malaysia comes online.
• Order intake and book-to-bill trends in early 2026 – especially in Semiconductor Manufacturing Equipment and Healthcare.
• Cash conversion as the prepayment unwinds and inventory normalises.

Overall, this is a cleaner, more focused XP Power setting up for the next upcycle. The strategy trades some short-term noise for better long-term returns – a trade I like, provided execution stays tight.