Xaar bounces back to revenue growth in 1H07, buoyed by Americas, Asia, and especially China
Xaar plc, the inkjet printing technology specialist group, said today turnover was up 5% to £23.4m while pretax was 35% lower at £3.1m in the six months ended 30 June compared to the same period in 2006.
The company said that sales had recovered in key markets, especially China where it had a diversionary problem in H206 with customs, which was resolved some while ago.
Profit was affected by investment in its new production facility at Huntingdon, not far from its headquarters on the Cambridge Science Park, which has been fully operational since January.
New chairman Phil Lawler (pictured) was upbeat on future prospects. In a statement to the London Stock Exchange he said: “Currently less than 10% of commercial printing worldwide is understood to be produced using inkjet technology, with the bulk of commercial print produced using traditional printing methods. From my own experience, it is clear inkjet markets offer significant long term growth prospects.
“At Xaar, we have world leading technology and a growing reputation for performance.
“Our challenge is to help accelerate the development of new printing machines that utilise our technology, and which encompass our highly functional print heads. As inkjet technologies mature, and gain wider acceptance, we believe Xaar is well positioned to capitalise on the opportunities this is now bringing."
Share price
Nevertheless, the market reacted by marking the share price down 2.5% to 214p in morning trade, though this is above recent lows. The group, one of the successes of the so-called Cambridge Cluster of high tech companies, and which is specialising in one of the initial technologies that helped build the region’s early momentum, is now valued at around £134.5m.
Mr Lawler said that sales of established products had recovered well from the second half of last year and the potential for Xaar’s newer technologies was undiminished.
“It is our strong belief that we have developed the right products to benefit from what will become a rapid escalation in the rate of adoption of inkjet technology by more traditional areas of the commercial print market, although exact timing remains difficult to predict”, he said.
Revenue growth for Asia overall was 17%, driven by strong growth in both China and India.
Sales to the Americas, whilst representing 11% of the total group sales, grew by 45% in the period amid encouraging signs from the South American sales operation.
This growth was not matched in Europe, which showed a 20% decline over the period although revenues were up 4% compared to the second half of last year. Xaar does not believe this reflects any fundamental trend, but is rather due to the individual performances of some customers.
Technology
The company said that in June, during the international FESPA exhibition in Berlin, it gave the first public demonstration of four colour, single pass, continuous web-based printing using our latest Xaar 1001 product. This demonstration apparently created a lot of interest and, together with a number of other sales and marketing initiatives, is creating a healthy spread of evaluation kits installed across commercial printing markets.
This website has reported in the past on some of the exciting prospects for Xaar’s inkjet technology outside the process of transferring ink to paper.
The company said the markets for non-print related uses of inkjet continue to look positive in the longer term, but more immediate opportunities for its technology, and the Xaar 1001 product in particular, exist in packaging markets.
Mr Lawson said Xaar intends now to focus much of its business development activities on the packaging and label markets.
12th September 2007
