Xaar sees good growth but cash levels fall

Half-year growth at industrial print-head supplier Xaar was driven by its Platform 3 (P3) products for industrial applications, resulting in a 20 per cent rise in revenue and a 57 per cent increase in pre-tax profit.

Gross margin increased two percentage points to 46% as a result of manufacturing efficiencies and improved product mix.

Income was up from £31.6m to £37.9m, pushing adjusted profit before tax to £6.7m from £4.3m the same period the previous year. Diluted earnings per share increased from 4.1p to 4.8p. Non-adjusted profit before tax climbed £0.6m to £4.7m.

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The dividend payment was maintained at 1.0p per share.

The company also said that the Huntingdon capacity expansion programme for P3 production has been completed ahead of schedule and under budget, and now requires scope for further expansion.

Chairman Phil Lawler said: "Over the last two years we have made excellent progress in maximising the growth opportunity in the ceramics segment, largely through the flawless execution of the capacity expansion programme in Huntingdon. This has resulted in a record revenue and profit performance for the first half of 2012.

"As expected, the geographic mix of our sales has shifted towards continental Europe, with these European based original equipment manufacturers (OEM) selling to the worldwide market. Although a good proportion of our revenue remains sterling denominated, our exposure to euro currency fluctuations has increased. Our treasury policy and procedures have been updated to mitigate the potential adverse effects of this.

"Royalty revenue from our licensees increased and was in line with management's expectations (8% growth over H1 [first half] 2011)."

Cash at the period end was reduced from £21.7m to £12.5m year-on-year, lower than £15.7m reported at its most recent trading update in July.

The share price fell 2.78% to 245p by 10:55.

NR