Xaar says trading back on track after customers' import duty issues in China
Xaar plc (XAR.L), the inkjet printing technology group said today that sales to China have recovered progressively since it reported in early August that some customers were being investigated by Chinese customs authorities over alleged non-payment of import duty.
It said in statement to the London Stock Exchange that it now expected to recover fully by early 2007.
Chief Executive Ian Dinwoodie (pictured) said: "We are pleased that we can now move on from the issues which have affected performance during the past six months, allowing us to focus our efforts on driving future growth."
Cambridge-headquartered Xaar was not directly involved in any customs investigations.
It said new logistics arrangements for the Chinese market had been put in place and were working well with product shipped directly into mainland China for collection by customers from one of two bonded warehouses.
“This has created a robust platform for future sales to the region. As part of the new trading arrangements, the Company has implemented sterling pricing and invoicing. This replaces the previous invoicing currency, the US dollar, and has removed the majority of the Company's US dollar exposure,” the company said.
Xaar also said in a general trading update that its Platform 2 product, the OmniDot, continued to generate interest and product launches incorporating it are expected during the course of 2007.
Subject to trading for the remainder of December, the company said results for the year to end December will be in line with Directors' expectations.
New factory
The Company's new Huntingdon production facility, which will make the Xaar 1001 (HSS) product range, is on target to begin commercial production in January, the company said.
“Interest continues to build in this product range and we expects its test partners to begin commercialising equipment over the next twelve months,” Mr Dinwoodie said.
Initially the fixed costs of the new production facility are expected to be £2.5m a year. These costs, and the associated early sales revenues from the Xaar 1001, will be reflected in financial results for the first time in 2007.
“Whilst this is expected to have an effect on overall reported margins, the Directors view the coming year with confidence,” it said.
Share price gains
The stock market liked the news, pushing Xaar’s share price up by 4.7%, or 10.75p to 242p, valuing the company at around £146m. The share price has climbed steadily since the early August news of the Chinese investigations, buoyed partly by reassuring trading conditions and the revelation that it had been approached by US-based Danaher Inc with an offer to buy out shareholders for around £130m. The Board rejected the offer as ‘opportunistic’, which looks about right at the moment.
7th December 2006
