5th Sep 2018 09:28
LONDON (Alliance News) - Xaar PLC reported Wednesday a swing to an interim loss with a drop in revenue, as the inkjet supplier announced German company Windmoller & Holscher will use its Xaar 5601 printhead in flexible packaging.
In the six months ended June, Xaar posted a pretax loss of GBP1.1 million, from a GBP5.7 million profit the year before.
Revenue in the first half decreased 20% to GBP35.3 million from GBP44.0 million.
Profitability, said Xaar, was impacted by the second phase of its Seiko Instruments Inc royalty upgrade and replacement deal announced in late 2017 coupled with the "aggressive decline" of the company's Ceramics business.
The printing company attributed the decrease in revenue to a drop in revenue from its Graphic Arts and Industrial sectors.
Graphic Arts revenue decreased 40% in the half, due mainly to "printer integration issues" suffered in China by the company's Thin Film Xaar 1201 printhead.
Industrial revenue decreased 62% due to the "aggressive decline" of the company's Ceramics business.
The Ceramics business, according to Xaar, "has reached maturity with nearly all production capacity now converted to digital technology". The decline has been "quicker than expected" and "difficult to predict".
Xaar declared an interim dividend of 1.0 pence, down from the 3.4p declared the year prior.
In a separate announcement, Xaar said its 5601 printheads will be used by German packaging manufacturing supplier Windmoller & Holscher.
Windmoller & Holscher is developing its first digital, single-pass press for flexible packaging and will be using Xaar's printhead after a successful test performance conducted over several months last year.
Xaar believe the deal represents a "significant milestone" in the "development of an economical and stable digital printing process for flexible packaging".
Looking ahead, the company expects trading to continue to be below previously anticipated levels.
The adoption of new printhead Xaar 1201 has been "significantly slower" than anticipated and the company said the "rate of decline" in the Ceramics business continues to be "aggressive".
Chief Executive Officer Doug Edwards said: "The long term opportunity for Xaar remains very significant, but trading continues to be impacted by the aggressive decline in our Ceramics business, and the unpredictability of the adoption of our new products.
"In the Printhead business, the Thin Film Xaar 5601 printhead is with a significant number of original equipment manufacturers for evaluation and early feedback on performance is very positive. To realise the full potential of our Printhead business, we have initiated a review of our strategic options for more extensive partnering and will update shareholders in due course.
"In the 3D business, we are very pleased with the joint investment with Stratasys for our High Speed Sintering printer technology and are excited about Xaar 3D's prospects. EPS offers the opportunity to develop the Product Print Systems business unit through organic and inorganic growth through M&A opportunities into a worldwide group."
Shares in Xaar were up 4.9% Wednesday morning at 193.00 pence each.
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