Xaar pays price for more than one night on the tiles
Cambridge inkjet printing technology business Xaar plc is shipping water. Already cutting jobs, as Business Weekly exclusively announced in June, the Science Park company has slashed its interim dividend from 3.4p to 1p after a 20 per cent fall in first half revenues and a slump from handsome profit to a pre-tax loss year-on-year.
Interim revenue to the end of June was down from £44 million to £35.3m. Xaar posted a pre-tax loss of £1.1m from a profit of £5.5m the year before. The company blamed an aggressive decline in its ceramics business.
Shareholder comments on the UK stock exchange chat line have been pretty hostile. One shareholder commented: “Revenues have collapsed. I see the current valuation as still far too high.”
Another intoned: “Being a shareholder here is like a slow motion car crash. most of the present issues were visible some years ago but were not addressed then: now the company seems to be fire fighting to stay alive.”
The company said the interim dividend nosedive reflected “expected cash requirements as the business continued to invest in its technology programmes and the reduction of cash flow contribution from our legacy ceramics business.”
CEO Doug Edwards said: “The long term opportunity for Xaar remains very significant but trading continues to be impacted by the aggressive decline in our ceramics business, and the unpredictability of the adoption of our new products.
“Despite these headwinds, we are continuing to hit important strategic milestones for our transformation across our three business units, where Xaar owns world leading technology underpinning a relevant and differentiated set of products and product development programmes.
“In the printhead business, the Thin Film Xaar 5601 printhead is with a significant number of OEMs for evaluation and early feedback on performance is very positive.
“To realise the full potential of our printhead business, we have initiated a review of our strategic options for more extensive partnering and will update shareholders in due course.
“In the 3D business, we are very pleased with the joint investment with Stratasys for our High Speed Sintering printer technology and are excited about Xaar 3D's prospects. EPS offers the opportunity to develop the Product Print Systems business unit through organic and inorganic growth through M & A opportunities into a worldwide group.”
Edwards was able to unveil some upbeat news by announcing that German company Windmöller & Hölscher, a leader in machinery and systems for the manufacturing and converting of flexible packaging, is developing its first digital, single-pass press for flexible packaging using Xaar 5601 printheads. The printhead was selected as a result of successful performance tests conducted over several months last year.
The announcement from W&H is a significant milestone in the development of an economical and stable digital printing process for flexible packaging, following the successful adoption of digital technology by the labelling and commercial printing sectors.
Windmöller & Hölscher, based in Westphalia, is the first OEM to publicly announce that its next generation of printers will be driven by the Xaar 5601.