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Xaar expands its product offering

The market seems unimpressed with the group's latest full-year figures
March 22, 2017

Reported full-year earnings for Xaar (XAR) benefited from reduced restructuring and administration costs. The inkjet printing group delivered flat gross profits of £44.7m in 2016 after a 140 basis point contraction in the margin. That its shares fell 8 per cent on these numbers no doubt had more to do with an outlook that highlighted lower revenue visibility, and suggested 2017 performance would be more second-half weighted than usual.

IC TIP: Hold at 330p

The group has established "four strategic pillars" to support its '2020' corporate strategy: ceramics, product printing and packaging, thin film, acquisitions and partnerships. The first and most important continues to throw up challenges for management, not least of which is "increased competition from other printhead suppliers". However, the group has strengthened its product portfolio, with hopes high following last September's launch of the Xaar 2001+ family of high performance printheads. There has been a complementary step-up in the R&D spend, partly reflecting the industry-wide switch to digitalised systems. And the tail-end of the year saw strategic investments in the group's 3D printing activity, with staff and facilities established in Nottingham and Copenhagen.

N+1 Singer gives adjusted pre-tax profits of £13.3m and EPS of 14.4p, respectively, for 2017 (from £19.5m and 21.2p in 2016).

XAAR (XAR)
ORD PRICE:330pMARKET VALUE:£256m
TOUCH:330-331p12-MONTH HIGH:526pLOW: 326p
DIVIDEND YIELD:3.0%PE RATIO:17
NET ASSET VALUE:181p*NET CASH:£49.3m

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20128615.717.54.0
201313740.143.38.0
201410923.125.09.0
201593.513.616.69.45
201696.217.919.410.0
% change+3+32+17+6

Ex-div: 25 May

Payment: 26 Jun

*Includes intangible assets of £33m, or 43p a share.