Xaar lowers revenue expectations amid production difficulties

Industrial inkjet technology provider Xaar updated the market on its current trading on Monday, reporting that revenue in the second half was now expected to be “broadly in line” with the first half.

That was in contrast with its interim results statement in September and its earlier trading update in July, in which the board indicated that growth in revenues from new products was expected to be second half weighted.

It said the shortfall against previous expectations resulted largely from fewer-than-planned new printer installs of Xaar's 2001 Printhead, and a slower-than-anticipated ramp up of the Xaar 1201 Printhead due to supply constraints.

“In ceramics, the printhead replacement business is now anticipated to represent around 70% of revenues in 2017,” the board said in its statement.

“The new 1003 Printhead has performed strongly in this market but as competition for new printer installs continues to intensify, we have seen more limited success with the 2001 product.”

Demand for the 1201 Printhead remained strong, but due to supply constraints, Xaar said it was not able to fulfil all demand in the current year.

It said it expected supply would improve with new capacity coming on stream next year, and its continue to expect “significant growth” in 2018.

“Although disappointed by the revenue shortfall on the underlying business, we are encouraged by our reducing dependence on our legacy ceramics business, where there is little visibility, and increasing competitive pressure,” the board explained.

“Our 2020 vision and commitment to delivering growth from new products in new markets is undiminished but the timing of ramp up of the range of new products we have introduced remains less predictable.”

In 2017, the company expects that 80% of underlying revenues would be from the seven new products introduced and new businesses acquired in the last two years.

“This progress, together with our previously announced increased investment in sales and marketing, supports our continuing transformation to a more diversified and customer-centric company.”