Xaar boss Doug Edwards has laid out ambitious plans for the inkjet manufacturer to more than double turnover by 2020.
Edwards took over as chief executive at the beginning of last year. Xaar has just filed its first full set of results under his tenure, which followed a difficult period when the company was badly hit by falling demand from its key Chinese ceramic tile market.
Sales at the group in the year to 31 December 2015 were down 14.4% to £93.5m, but gross margins increased to 47.8% from 44.5%.
The group pumped additional resources into its R&D spend, which grew by 4% to £19.9m. Xaar also increased its cash pile by nearly 50%, to £69.7m, with plans to use the funds for acquisitions.
Edwards has conducted an in-depth review since taking the top job and has already made a number of changes to the business, with new executives joining and a key appointment made in the 3D printing area. He said it had been an “encouraging” year.
He said the firm’s ambitious growth plans to increase sales to £220m by 2020 would come from four areas, each producing sales of at least £50m: maintaining Xaar’s market leading position in ceramic tile decoration; packaging (including coding and marking, labels and direct-to-shape printing); new applications such as textiles and wide-format for its upcoming Thin Film printhead; and lastly 3D printing, partnerships and acquisitions.
“We are sitting on £70m right now and we are looking at acquisitions and have been for a while,” Edwards said. “We’re looking at areas such as integration that make life easier for our customers and cut down their development time. We also want to accelerate the adoption of direct-to-shape printing, which at the moment is a very fragmented market with lots of little players.”
Edwards, who is a former Kodak executive, said Kodak’s up-for-sale Prosper inkjet business was “interesting technology but not for us.”
He is also targeting growth in the Americas, where Xaar’s sales are currently just £6.5m.
Xaar’s current business split is 66% industrial printing, 17% packaging, and 10% graphic arts with the remainder coming from its legacy royalties business.
The group’s operating margins prior to exceptionals slipped slightly from 22.2% to 21.8%. A £6.1m restructuring charge related to the closure of its Swedish manufacturing facility, due to shut down mid-2016, reduced operating profits to £13.1m (2014: £22.7m). Costs associated with the Sweden closure have increased from the anticipated £5m because Xaar has kept the plant open for longer than initially envisaged to complete orders.
In ceramics, the firm’s new GS40 head is allowing the polished tile market – typically used in heavy footfall areas – to convert to digital production because the heads can jet fluids deeper into the tile.
Xaar will launch its 1003 head next week, replacing the existing 1002 model for ceramic tile printing applications. Edwards said it was “maintenance free and delivers the greatest production uptime in the industry”.
In packaging, he cited the Xaar Print Bar as an example of the type of product development the group planned to do more of, in what it described as “beyond printhead” applications.
“There’s a lot of enthusiasm for the Print Bar. We’ve just shipped the first one and will do a pretty significant number this year. They’re all going into labels for special effects such as under-white, or for jetting glues for cold foiling,” Edwards explained.
Xaar’s packaging business grew by 16% last year, and within that labels grew by 30% year-on-year. OEMs in the label space include Durst, EFI, FFEI and Dantex.
Xaar’s Thin Film printhead family will launch at Drupa with the Xaar 5601 (also known as P4), which has 5600 nozzles, the first product out of the gate. Textiles and wide-format are the initial target markets for Thin Film, followed by sheetfed digital.
Edwards said Xaar was already working with a "major partner" in the textile space, with a press slated to be launched in May 2017.
"And we’re very focused on the wide-format solvent market in China with another Thin Film product. It’s a significant market and we’ll be delivering an offering to enable Chinese manufacturers to just take a printhead,” explained Edwards, who said some Chinese manufacturers were currently stripping Epson printheads out of wide-format devices in lieu of an alternative solution.
At Drupa Xaar will also show the 5601 head printing on paper, to demonstrate its potential in sheetfed digital.
“We are targeting high-resolution, extremely high productivity. The cost per nozzle is very competitive. Our intention is to attract [sheetfed] OEMs and we hope to select a couple at Drupa. It could be a pretty lively show,” he added.
Xaar chairman Phil Lawler is also stepping down after nine years in the role. He will be replaced by Robin Williams, who has been a non-executive director of the business since 2010.
Xaar’s share price fell in early trading yesterday but finished up 2p at 444.5p.