In a trading update released last Friday (28 December), the business said that while it has made “good progress” in developing potential future revenue streams through partnerships with a number of OEMs that are basing their next generation products on the Xaar 5601 Thin Film printhead technology, its revenues in the shorter term have continued to be adversely impacted by declining sales into the ceramics market and slower than expected uptake of the Xaar 1201 product.

Consequently, the board said it now expects revenue in the six months to December 2018 – the second half of the 2018 financial year – to be “only slightly better” than the first half.

This period saw the business post a 39% slump in underlying revenues and a £1.1m loss, leading chief executive Doug Edwards to admit that his 2020 growth target of £220m turnover was now “unrealistic" for the business.

Excluding £9.8m of one off royalties received in the first half of the year, Xaar’s revenue for 2018 as a whole is expected to come in at around £64m. This would represent a decline of 36% year-on-year; for the year to 31 December 2017 sales at the business had increased by 4% to £100.1m.

The Cambridge-headquartered group added sales mix effects are expected to continue to adversely impact gross profit margins.

The board said it continues its review of strategic options for “more extensive partnering” in the printhead business unit and expects to update shareholders on progress with this when the company announces its preliminary results on 21 March 2019. Its two key partners are currently Xerox for bulk printheads and Ricoh for thin film printheads.

Xaar’s share price slumped by 31.6p to 127.6p following the release of the trading update last Friday but has since recovered to 156.28p at the time of writing.