Xaar 1Q09 trading resilient; balance sheet strong
Xaar plc, the inkjet printing technology group HQed in Cambridge, said trading for the first quarter of the year was in line with the Board's expectations at a level similar to that for Q1 2008 and of the second half of 2008.
The Board said it was encouraged but, given both a continuing lack of visibility of customer orders and the current uncertainty in the business environment due to the ongoing global economic situation, must remain cautious when looking forward.
The company said the first of its new second generation Platform 1 products, the Proton, was successfully launched during the period at the Sign China show in Guangzhou.
Sales of the Proton into China have been ahead of expectations. It will be released into India and Latin America during this year as the Group's OEM customers in those regions launch new printing machines incorporating the printheads. The Xaar Electron, the second new Platform 1 product, remains on course for launch in customer printing machines at the Shanghai Ad show in early July.
Original Equipment Manufacturers in western markets continue to launch printing machines based on Xaar's Platform 3(P3) technology with further product launches during the period.
Whilst the number of OEM customers bringing printing machines based on P3 technology to market is encouraging, the transition from product launch to volume sales remains slow and cannot be expected to be immune from the effects of the global economic situation, the company said.
The Group has maintained its strong balance sheet throughout the period with gross cash at end March of £12.4m (31 December 2008: £11.6m). Total debt at 31 March 2009 was £0.6m (31 December 2008: £0.6m). The cash inflow during the period reflects both stable trading and the benefits of previously announced cost saving measures.
In April Xaar announced the rationalisation of its manufacturing facilities which will involve the eventual closure of its plant in Stockholm, Sweden and the relocation of that manufacturing capability to the Group's manufacturing facility in Huntingdon, near Cambridge. This will take up to two years to complete and is expected to result in a substantial reduction in the cost base.
The share market liked what it heard. The share price gained 2% in morning trading. Xaar now has a market capitalisation of around £47m.
