Xaar 1H08 results frustrated by China’s economy, but technology points to better things to come
Xaar plc, the inkjet printing technology specialists, said revenue slipped almost 4% to £22.5m in 1H08 , while pretax profit 23% to £3.8m.
The Cambridge HQed firm said the results reflect improved profitability despite lower than expected sales into China.
Chairman Phil Lawler said: "The current international economic issues are affecting the global printing market and Xaar cannot reasonably expect to be immune from this. ... there is a lack of visibility and increased uncertainty with regard to demand from China for our Platform 1 products over the next few months.
"We now believe sales to China will be lower than previously expected for the second half of the year and this will have some effect on second half profitability.
Predictably the stock market, or at least segments of it, took fright at this, selling Xaar shares to shave almost 12% off its share price. The group is currently valued at £67m.
I have to declare a bias here. I like Xaar (but don't own any shares in this or any other Silicon Fen company) and I think this market reaction is way OTT. A year or so ago I had a detailed briefing by Xaar on the long term prospects of ink jet technology. And the possibilities are awesome, and Xaar is positioning to make the most of them.
So I agree with Mr Lawler who said in a statement to the London Stock Exchange : "We have excellent new technologies that are clearly of significant commercial value and will play a leading role in the continuing market transition to digital inkjet printing."
In summary, 1H08 was a period of sharp contrasts for Xaar; there was continuing endorsement of its new technologies - Platforms 2 and 3 - by OEMs, but on the other hand disappointing Platform 1 sales to China.
