Xaar continues to work hard to convert users of commercial and industrial printing towards its state-of-the-art inkjet technology. The problem is that the rate of conversion is slow and Xaar is also battling against its own licensees when trying to sell its products.
This activity has hit its core Chinese market hard and Xaar has lost market share there. The Asian market accounts for almost half of the total sales, so the dip in volumes was the main reason for the collapse in profits. India is still doing well, though, and Xaar is hopeful of winning new business from its recently launched Proton and Electron products.
Meanwhile, sales in Europe and the Middle East edged ahead 5 per cent to £14.9m, but the star performer was the Americas, where Xaar boosted revenues by 19 per cent to £6.8m.
Xaar has responded by cutting 100 employees - this and other cost saving measures should yield annual savings of £2m. Xaar is also considering relocating its site in Sweden to its main factory in Huntingdon. The move would substantially reduce manufacturing costs and a decision on closure will be made within the next couple of months.
Broker Panmure Gordon forecasts 2009 pre-tax profits of £2.8m and EPS of 3.0p.
XAAR (XAR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 55p | MARKET VALUE: | £34.6m | |
| TOUCH: | 53-57p | 12-MONTH HIGH: | 220p | LOW: 39p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 61p* | NET CASH: | £11m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2004 | 34.8 | 6.27 | 7.7 | 1.0 |
| 2005 | 42.8 | 10.0 | 11.6 | 1.5 |
| 2006 | 42.2 | 6.91 | 7.9 | 2.0 |
| 2007 | 47.9 | 7.32 | 8.9 | 2.5 |
| 2008 | 42.0 | 4.35 | 5.6 | 2.5 |
| % change | -12 | -41 | -37 | - |
Ex-div: 13 May Payment: 12 Jun *Includes intangible assets of £7.4m, or 12p a share | ||||
