Xaar issued a trading update on Tuesday 17th, which predicted revenue for 2014 to be £130m, or 3 percent lower than the £134.1 million of adjusted revenue achieved in 2013 (2012: £86.3 million). Xaar attributes this to a slowdown in the digitlly printed ceramic market, which had been the major factor drivng Xaar’s spectacular growth last year.
Xaar does expect to see growth in the ‘direct to shape’ market but this is unlikely before the end of this year. At the same time, the company has also invested more heavily than last year in R&D, particularly in thin film piezo printheads, which should be available in 2016.
In the meantime, Xaar has announced several variations on the 1002 printhead that it introduced earlier this year, and expects additional revenue as a result later this year. Xaar will also launch two new products: the Xaar 501 printhead, targeted at both the graphics and packaging markets, and the Xaar XPM, a gigabit-Ethernet based electronics sub-system.
However, the profit warning sparked a drop in Xaar’s share price, from 745p on Monday 16th, opening at 584p on Tuesday morning and continuing to fall to 515p by Wednesday lunchtime.
Earlier this year, the news that Xaar’s CEO Ian Dinwoodie was planning to retire in 2015 also led to a drop in the share price. The share price had been over 1000p earlier this year, but has been declining steadily from a high point of 1135p in February this year.
However, there is a good chance that the share price will recover, given that Xaar has already stated that most of its sales tend to be in the second half of the year due to seasonal reasons such as Chinese New Year, with China being a major market, particularly for ceramics.