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Investors needed to prevent Xaarmageddon

The inkjet printhead manufacturer had a torrid year, and will not award a final dividend
March 21, 2019

Xaar (XAR) is searching for external partners to invest in and help scale up its fledgling thin film product portfolio, as the inkjet printhead manufacturer admits that it has thus far failed to realise the potential of its new products.

IC TIP: Sell at 113p

Chief executive Doug Edwards likened the proposal to actions taken by Xaar in its 3D printing activities, where a separate company was established and a deal was agreed with 3D printing manufacturer Stratasys to provide market access. Thin-film growth was disrupted as Chinese partners struggled to integrate its 1201 printhead into printers, according to Mr Edwards.

Xaar’s swing to a £14.9m pre-tax loss was ultimately driven by the decline of its legacy ceramics business’s market share, particularly in China. Here, plummeting printer prices have squeezed Xaar, as a printhead amounts to around half the cost of a printer. Xaar is following these prices down and has suffered as a result, the chief executive says. Meanwhile, at the top end of the market, Italian competitor System Graphics has taken market share with its promise of round-the-clock “up-time performance”.

Analysts at N+1 Singer forecast adjusted full-year 2019 pre-tax losses and loss per share of £6.8m and 7.4p respectively, against a prior year loss of £2m and loss per share of 2.2p.

XAAR (XAR)    
ORD PRICE:113pMARKET VALUE:£ 88m
TOUCH:113-119p12-MONTH HIGH:375pLOW: 112p
DIVIDEND YIELD:0.9%PE RATIO:NA
NET ASSET VALUE:166p*NET CASH:£24.7m
Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201410923.125.09.0
20159413.616.69.45
20169617.919.410.0
201710012.314.310.2
2018**64-14.9-16.01.0
% change-37---90
Ex-div:na   
Payment:na   
*Includes intangible assets of £38m, or 49p a share **No final dividend, an interim dividend of 1p was paid during the year