Xaar dives as it warns 2006 profits worse than expected
The Cambridge-based inkjet printing technology group Xaar plc (XAR.L) said today that lower than expected overhead recovery had hit profits for the six months to 30 June 2006.
As a result, it said in a statement to the London Stock Exchange, "profit before tax for the full year is now likely to be below current year expectations and similar to the level reported in 2005".
The news sent the company's share price into a dive that saw it shed 19%, or 49p, to reach 210.5p by midmorning. That values the company at just under £130m.
Xaar reported that revenue for the six months to end June was £22.3m, 12% ahead of the same period last year. Sales to Europe and the US grew in line with expectations, but de-stocking by customers in Asia resulted in the growth in sales in the second quarter being slower than had been expected and planned for.
Profit figures
Profit before tax for the first half of the year was about £4.7m, compared with £4.9m (on a comparable basis) for the previous corresponding period. This reflected lower than expected overhead recovery.
"While growth in profits is expected in the second half of the year, profit before tax for the full year is now likely to be below current year expectations and similar to the level reported in 2005," the statement said. Pre-tax profit in 2005 was £10.0m. The market consensus forecast had been for around £13.5m.
Cash generation during the first half was strong with cash at the end of June of around £16.3m, compared with £17.5m at 30 June 2005 and £14.5m at 31 December 2005.
The company said this reflected the resolution of certain customer payment issues referred to at the end of last year, payment of the final dividend for 2005 of £0.9m and capital expenditure on tangible and intangible assets of £4.1m.
The company said the board was confident about prospects for 2007 and that a further update will be given at the time of release of the group's interim results in September.
11th July 2006
