The Cambridge-headquartered inkjet manufacturer had already pre-announced its likely performance for the half-year, as it strived to get back on track after last year’s dramatic drop-off in sales to its single-biggest segment, the Chinese ceramics market.
Sales in the six months to 30 June were slightly higher than expectations at £47.8m, down 21% year-on-year, but almost on a par with the June to December 2014 period when the group had sales of £48.8m.
“We saw that step down last year and we’ve seen stabilisation in the first half, but we remain cautious especially given the recent China news,” said chief executive Doug Edwards.
The firm aims to capitalise on its worldwide ceramics market share of circa 75%, as Chinese customers look to extend into compatible areas, such as glass, while its European customers in Italy and Spain are embarking upon upgrade and replacement cycles.
Xaar has also pinpointed direct-to-shape package printing as a new and potentially large market. Belgian brewery Martens has just gone into full-scale production with a KHS system using Xaar 1002 heads and Agfa ink, printing in five colours directly onto PET beer bottles, doing away with the need for labels.
Edwards said it was difficult to predict how big the market could be, and was wary about putting a potential value on it. But he said the potential was huge: “If just a few per cent of the overall market converted it would be bigger than ceramics.
"Market adoption will be driven by brands and they are starting to see direct printing as a viable process.”
Martens has used the technology for the launch of a new beer brand with a cross-media ‘talking bottles’ campaign featuring characters from a well-known sitcom.
Also in the packaging space, Xaar will show a new print bar aimed at hybrid flexo printing applications at next month’s Labelexpo show in Brussels.
“We have some special features because we can jet varnish and abrasive pigments such as metallics,” Edwards added.
Its OEM partners will show two new inkjet label presses using Xaar tech at the expo.
Edwards has set a key strategic imperative to reduce the group’s reliance on industrial printing, which currently accounts for 70% of sales, by growing its position in packaging (15%) and graphic arts (9%).
Plans to take its know-how into sheetfed inkjet presses for commercial printing, revealed by PrintWeek in March, are progressing. “We’ve shown the P4 printhead to all the major guys and we’ll be picking one or two partners to work with between now and Drupa,” Edwards said.
The printhead will be at Drupa, with implementation within a press slated for the second half of 2016.
Gross profit margins of 45% (2014: 47%) beat expectations, but the group took a hit at the operating level as the reduction in sales impacted manufacturing efficiency.
Xaar has also maintained its high level of R&D investment, which increased to £6.3m from £5.9m. Operating margins fell from 25% to 7% year-on-year, although Xaar stated alternative comparable figures of 26% and 19%, on an adjusted basis, excluding exceptional costs and a number of other charges.
The planned closure of its Swedish manufacturing facility, which had already been announced, will cost the group around £4.8m.
Pre-tax profits for the half-year, including restructuring costs, were down 76% to £3.7m. The firm improved its net cash position, which grew by 22% to £58.6m.
Xaar’s share price went up by 38p, or 8%, to 490p in early trading after the announcement.
