The shift from analogue to digital printing in the ceramic tile industry is driving growth at ink-jet printing specialist, Xaar (XAR). There's significant headroom for further expansion, too - driven by China, where over 40 per cent of the world's ceramic tile production is based, but where just a tenth of the market there has digitised so far.
Reflecting that, Xaar's industrial segment grew full-year sales 74 per cent to £55m and chief executive Ian Dinwoodie expects deco-laminate printing sales to grow appreciably going forward. Although sales into the packaging market rose a more sedate 3 per cent to £12m, while sales to the mature graphic arts market slipped 28 per cent to £13.1m - the launch of a new product later this year should help Xaar to regain market share there.
Xaar also continues to support growth with investment - research & development spend rose 23 per cent in 2012 and now represents around 9 per cent of sales. The group successfully completed its £22m capacity expansion at its Huntingdon facility, too. And, with net cash generated from operating activities having jumped 56 per cent to £19.9m, Xaar looks well placed to support that investment. Moreover, the group gross margin rose 3.2 percentage points to 47.4 per cent.
Broker Investec Securities expects adjusted pre-tax profit of £20.7m for 2013, giving adjusted EPS of 22.1p (from £16.8m and 18.1p in 2012).
XAAR (XAR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 393p | MARKET VALUE: | £294m | |
| TOUCH: | 386-393p | 12-MONTH HIGH: | 395p | LOW: 185p |
| DIVIDEND YIELD: | 1.0% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 99p* | NET CASH: | £28.9m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 42.0 | 4.35 | 5.6 | 2.5 |
| 2009 | 41.5 | -0.66 | 0.1 | 2.5 |
| 2010 | 54.7 | 5.43 | 6.3 | 2.5 |
| 2011 | 68.7 | 9.13 | 10.8 | 3.0 |
| 2012 | 86.3 | 15.7 | 17.5 | 4.0 |
| % change | +26 | +72 | +62 | +33 |
Ex-div: 22 May Payment: 21 Jun *Includes intangible assets of £4.7m, or 6p a share | ||||
