Xaar revenue and earnings fall as it advances turnaround strategy

Inkjet printing technology company Xaar reported a 37% decline in revenue in its full year results for the 12 months ended 31 December on Thursday, to £63.5m.

The London-listed firm’s gross profit almost halved on an adjusted basis, to £24.4m from £47m, while its gross margin slipped to 38.5% from 47%.

It explained that the drop in revenue was largely down to a decline in its ceramics business, with the gross margin affected by an “aggressive” 58% decline in revenues from its industrial segment, as well as a £5.3m fall in revenue from licensees and a £2.5m one-off provision for slow moving inventory.

Gross research and development investment was lower during the year at £15m, compared to £18.1m in 2017, although net research and development investment was up to £14.7m from £12.3m.

Xaar swung to a loss before tax of £11.7m on an adjusted basis, from profits of £18m a year earlier, with diluted losses per share totalling 9.7p, compared to earnings of 20.7p in the 2017 financial year.

Net cash at year-end stood at £27.9, down from £44.7m, while the board confirmed total dividends per share of 1p, compared to 10.2p 12 months earlier.

On the operational front, Xaar said its new ‘three business unit’ structure had been implemented, and its revenue streams were becoming more diversified, with 79% derived from new products and businesses introduced in the last three years..

A strategic review of its printhead business highlighted the preferred way forward, the board explained, adding that the ‘Xaar 5601 Thin Film’ printhead was being integrated and evaluated by more than 20 original equipment manufacturers across the packaging, commercial, textiles and decor sectors.

Three manufacturers had already announced publicly, being Windmöller & Holscher, Neos and KELENN Technology.

The formation of the Xaar 3D joint venture with Stratasys was announced in July, with the first Beta High Speed Sintering printer placed in December.

Additionally, the board said Xaar’s Engineered Printing Solutions subsidiary had signed a distribution agreement with Machines Dubuit to distribute exclusively its product portfolio in North America.

“We are making progress in transforming Xaar into a more diversified and customer centric organisation,” said chief executive officer Doug Edwards.

“Challenges clearly remain across our printhead business.”

Edwards said that, following the review conducted in 2018, it had become “increasingly clear” that in order to realise the full potential of the company’s thin film portfolio, it required strategic investment partners to help it achieve the necessary scale.

“The long term opportunities remain for our new printhead products, particularly thin film, and in our new business areas of 3D printing and product print systems.”