Xaar loses over 26 per cent off share price as Asian customers suffer customs probe
Cambridge inkjet company, Xaar plc, suffered a heavy blow on the market today after the firm revealed that a number of its Chinese customers were under investigation from the Chinese authorities for non-payment of import duty.While Xaar was notified about the impending investigation on 19 July, at the time it did not consider it would have a material effect on sales. However, as the investigation has advanced Xaar has since decided it was likely to have an impact on trading.
The shock announcement took over a quarter off Xaar’s share price which fell 41.5 pence to 113.5 pence a share.
It follows hard on a profit warning in July, which warned the market that profit before tax for the full year was likely to fall below expectations primarily due to de-stocking by Asian customers.
The statement from Xaar said: “Digital printing is a high profile growth industry in China which has attracted similar investigations before, with little or no impact on the company.
“It has now become apparent, however, that the current investigation is being coordinated by central customs authorities, rather than by local officials as has previously been the case. This is likely to increase the period of the investigation and its impact on current trading which remains below expectations.
“It is the company’s aim that results for the full year should be similar to those reported for 2005 but, until the current investigation has run its course, it is not possible to quantify accurately the impact it will have on the timing of sales over the remainder of the year.”
A further update will be issued with the interim results which are scheduled for release on 13 September.