Xaar's chief executive Ian Dinwoodie sounds tired of repeating that the Chinese business, which suffered problems , is back on track. But given the weaker comparators that this created, shouldn't sales have picked up more than 5 per cent? "It's a more modest figure than we would have hoped," concedes Mr Dinwoodie. But that could start to change as the first industrial customers start to deploy the long-gestating platforms two and three of Xaar's digital inkjet printers.
It takes customers between 18 months and three years from receiving a development kit before Xaar starts to see meaningful volumes of sales, with little Xaar can do to influence the timetable. "It's a frustratingly long process," says Mr Dinwoodie, but the previous generation has lasted for 12 years, justifying the current investment. But today, gross margins are weaker than expected at 53 per cent, due to low utilisation of the new Huntingdon facility. European sales were also below forecasts, though Mr Dinwoodie says this was due to one large customer, rather than a shift in end demand.
House broker Panmure Gordon expects full-year EPS of 10.2p and 15.0p in 2008 (8.7p in 2006).
Xaar (XAR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 214p | MARKET VALUE: | £134m | |
| TOUCH: | 214-216p | 12-MONTH HIGH: | 266p | LOW: 130p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 36 | |
| NET ASSET VALUE: | 54p* | NET CASH: | £10m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 22.3 | 4.77 | 5.5 | nil |
| 2007 | 23.4 | 3.12 | 3.6 | nil |
| % change | +5 | -35 | -35 | - |
*includes intangible assets of £7.82m, or 12p a share | ||||
Click for a guide to the terms used in IC results tables.
