7 July, 2020 - 20:58 By Tony Quested

Xaar’s 30th birthday: Now, where to stick the candles!

Management at Cambridge inkjet innovator Xaar plc say they have sent champagne to all the team to mark the company’s 30th anniversary. But the harsh truth is that for shareholders the bubbly went flat years ago.

Xaar would be well advised not to ask stockholders where to stick the candles destined for the birthday cake.

At the time of writing, at close of the UK market on Monday night, the share price stood at 57.80p and the market cap was £45.23 million, hardly a bottom feeder taking in the broader scheme of things.

Then you look at the 52-week profile and see a high of 99p and a low of 18.70p. Then you review September 2019 and see that the stock nosedived 40 per cent after a poor set of results, news of a painful restructuring and notification that CEO Doug Edward was one of several executives standing down.

Oh – and there were likely to be as yet unspecified job losses from a related decision to review the Printhead business. First half revenue was down £12.8m to £22.5m year-on-year and the underlying loss was £7.6m.

We had reported at the end of June 2018 that Xaar had made an unspecified number of job cuts as part of a cost-slashing exercise in a bid to meet profit targets. 

That followed a fall in revenues in the Cambridge Science Park company’s ceramics business and poor visibility regarding a diversification strategy. Back in October 2014, Xaar cut a fifth of the workforce – around 160 jobs – after problems in China.

So the only way is up – right? Not necessarily. On April 23 this year – a calendar month after the coronavirus lockdown – Xaar reported a revenue fall and much-widened loss for 2019, but added it was yet to see a fall in customer demand due to the Covid-19 outbreak.

Revenue was 18 per cent lower in 2019 at £49.4m from £60.5m. Xaar’s pretax loss ballooned to £71.9 million from £15.1 million. The company decided against paying a dividend.

The naked truth is that at the last count, the stock had declined 89 per cent in three years. Pass the champagne flute – and keep on passing it down the line! A more sobering brew would appear to be required.

Business Weekly has championed Xaar since it was founded in the same year as ourselves – 1990 – by a team of four including Mike Willis and Mark Shepherd. 

The vision was to commercialise the work done at Cambridge Consultants by Steve Temple and David Paton, the inventors of Xaar’s piezoelectric Drop-on-Demand technology; both of whom also joined the company shortly after Xaar began life. 

The company signed its first commercial agreement in 1991 with Brother Industries who licensed the technology to develop home office printers and fax machines. 

By 1992 Xaar had reached a significant milestone, surpassing £1m in sales achieved from license fees, the sale of evaluation kits and technical consultancy. 

In 2013 after a fabulous previous 12 months in terms of generating cash and cracking global markets the company was named this newspaper’s Business of the Year. Its ability to innovate in the inkjet world is not and never has been in question. 

The company continues to have world-class technology at its fingertips. The fact is that it has been too accident prone – too often.

Xaar has spent the lockdown hunkering down and says it is well placed to execute a bounceback. Time will tell.

Recent innovations have included High Laydown Technology, which enables deposition of large quantities of fluid at high line speeds, and Ultra High Viscosity, which allows fluids with significantly higher viscosities – up to 100 centipoise at typical operating temperatures of around 40˚C to 50˚C – to be jetted. 

Such developments have increased the flexibility of the Xaar ceramics portfolio and opened growth in new cutting-edge sectors such as 3D Printing and Additive Manufacturing.  

John Mills, CEO of Xaar said: “30 years is a significant milestone for any business and we were all extremely keen to mark the occasion and celebrate our accomplishments as a team – despite many of us still working in separate locations. 

“It has been a real joy reviewing the many achievements from over the last 30 years and through this, acknowledging the unique heritage we have in the development and use of inkjet technology worldwide.

“We are proud to be a leader in inkjet technologies and very much look forward to achieving our next significant milestones.”

As someone who has championed Xaar for the best part of three decades, no-one would be more thrilled than I if the company emerges from the current pandemic as a stronger and more sustainable business. But shareholders are expecting action rather than words from here on in: now sustained success really would be the icing on the cake.

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