Xaar shares nosedive on poor results, management exodus and looming job cuts
The UK share price of Cambridge inkjet technology business Xaar plc dropped more than 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.
There are also likely to be as yet unspecified job losses from a related decision to review the Printhead business.
First half revenue was down £12.8 million to £22.5m year-on-year, gross loss was £21.7m lower to £2.6m; reduced factory output and an unfavourable product mix accounted for £3.9m of the fall. The underlying loss was £7.6m.
Impairment charges of £39m have been taken as a result of a decision to cease all Xaar’s Thin Film activities.
Edwards will leave at the end of 2019 to rejoin his family in the United States and pursue fresh opportunities; he will be replaced by current printhead unit chief John Mills. Edwards will remain available to Xaar until the end of March 2020 to ensure an orderly succession.
Xaar chair Robin Williams, CFO Shomit Kenkare and non-executive director Margaret Rice-Jones also announced their intentions to leave.
The decision to shut the Thin Film business follows a strategic review. Xaar has now unveiled further restructuring of the Printhead business, subject to employee consultation, which is expected to deliver £8m of annualised savings but will inevitably lead to job cuts – number to be confirmed.
Edwards said: “The increased investment in Xaar 3D positions it well for growth and unlocks value for shareholders. Product Print Systems is showing good growth and a strong sales pipeline.
“It is with considerable reluctance that we have taken the decision to cease all Thin Film activities in the Printhead business, but without a strategic investment partner it becomes, by ourselves, unaffordable to continue.
“This decision and the associated restructuring, although painful, will result in a substantial improvement in profitability and operating cashflow for the company in the coming year.”
The market has frankly grown tired of Xaar’s regular changes in business structure and resultant redundancies.
As we reported at the end of June 2018, Xaar made a number of unspecified 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.