News Column

Xaar Lowers Revenue Expectations As Ceramic Tile Market Cools

August 28, 2014

Hana Stewart-Smith

LONDON (Alliance News) - Inkjet printing technology company Xaar PLC lost a quarter of its value early Thursday, after it lowered its revenue expectations for the full year due to softening demand in the Chinese ceramic tile decoration market, and it posted a lower pretax profit for the first half of the year.

Demand for ceramic tile decoration has weakened in the third quarter due to slowing construction activity in China, and the the company lowered its full-year revenue expectations to GBP115 million to GBP125 million, from a forecast of about GBP130 million it gave in July.

It said it expects its adjusted operating margin to be broadly in line with the 26% it achieved in the first half of the year.

Still, it raised its interim dividend to 3.0 pence, from 2.5 pence, and said it expects to pay a total dividend of 9 pence for 2014, which would be a 12.5% increase over 2013.

Xaar posted a pretax profit of GBP15.3 million for the six months to June 30, down from GBP23.4 million a year earlier, as revenue declined to GBP60.4 million, from GBP70.2 million.

The company said that, following an exceptional 2013, its business has reverted to "more typical trading patterns" during the first half, with a usual seasonal lull around Chinese New Year. The company saw more competition in ceramic tiles, which has hit its pricing, although it said it had strengthened its offering with new product launches.

The company said that the sales growth it had expected in other applications has not yet materialised, but progress is as expected as its partners continue to develop their products.

It is continuing pre-production activities in its 'Direct-to-shape' application, which will allow printing on non-flat surfaces like bottles, and said its long term expectations for this product had strengthened. The first field trials of the products are being undertaken during 2014, it said.

Its Thin Film programme remains on track, as it finalised its production strategy for its first Thin Film products, and it expects sales to begin in late 2016.

"We remain excited about Xaar's long term potential at the centre of the digital inkjet revolution," said Chief Executive Ian Dinwoodie in a statement.

Shares in Xaar were trading down 25.9% at 415.00 pence Thursday morning, by far the biggest decline on the FTSE 250.

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Source: Alliance News

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