Xaar losses narrow; launches new printhead
Tuesday, April 27, 2021
Xaar has posted narrowing losses in its 2020 results, with the manufacturer confident on a return to growth, and has also launched a new printhead, the latest from its ImagineX platform.
In its results for the year ended 31 December 2020, the Cambridge-headquartered inkjet developer recorded revenue on continuing operations of £48m, down slightly on the £49.4m it achieved in 2019.
Xaar’s pre-tax loss for continuing operations was £4.3m, compared to a loss of £10.9m in 2019.
Under chief executive John Mills, who took over in late 2019, the business adopted a new strategy a year ago that would see it focus on its bulk printhead business and move to selling only through its OEM partners rather than via dual distribution.
It is focusing its printhead efforts on six key areas: ceramics and glass, including decor; wide-format graphics and labels; packaging and textiles; coding, marking and direct-to-shape (DTS); 3D and advanced manufacturing; and licensee royalties.
Of these areas, in 2020 sales in ceramics and glass were up 13% to £13.8m, wide-format graphics and labels was also up 13% to £6.3m, and packaging and textiles grew by 1% to £0.9m. The other three areas were down, with coding, marking and DTS sales declining 3% year-on-year to £11.5m, 3D and advanced manufacturing down 5% to £2.5m and licensee royalties dropping by 42% to £0.4m.
Xaar’s product printing wing EPS, based in North America, recorded sales of £12.7m in 2020, down from the £15.7m achieved a year earlier.
Xaar said EPS was impacted by a fall in demand through the worst of the coronavirus pandemic but, with a small grant from the US government, made only a small [£500,000] loss “and remains a valuable contributor to the group”.
Xaar said it is now also in advanced discussions to sell its remaining stake in Xaar 3D. Xaar’s directors said they have assessed that the disposal is “highly probable” and therefore Xaar 3D was classified as a discontinued operation in the 2020 results.
Chief executive officer John Mills told Printweek the sale, “which should be weeks, not months” away, would enable Xaar to focus on its core business.
“Ultimately the plan was always to sell 3D and for us the real benefit of this is the long-term supply agreement with Stratasys. We’ve built a great relationship with Stratasys and helping them develop new products across their broader business is important for us as well because they’re a fantastic company and there are lots of opportunities there.
“I think it’s the right thing to do; it’s the right timing for Xaar 3D and Stratasys. We have the cash to invest more in the 3D to bring it to market, but actually we see the opportunity to invest that cash in other things to help accelerate some of the more vertical integration strategies that we see.”
Xaar’s gross profit in 2020 climbed to £13m from £12.3m a year earlier while its R&D investment was up to £4.5m from £3.1m in 2019.
The business had restructuring costs of £754,000, compared to £1.5m a year earlier, which mainly related to redundancies.
It said its 2020 costs were predominantly related to the final costs in liquidating its legacy Swedish entities and provisions for the dilapidation and exit of the office on its Cambridge Science Park. It is now moving to new, leased premises in Waterbeach, around six miles north of Cambridge, with the relocation set to complete in June.
“There are a number of functions that have moved to Huntingdon [Xaar’s manufacturing plant] because it made more sense for them to be close to the factory,” said Mills.
“And if you look at the size of the building that we had, we were paying something like £1m a year for that premises on the Science Park and it was only half full when we were all there.
“What’s clear through Covid is that flexible working is something that we’re going to retain. We’re not going to see everybody there all the time, so we’ve moved out to Waterbeach to a building which will save about £600,000 or £700,000 a year in costs.”
Xaar said its revenue for 2020 was “in line with management expectations” and it believes it is on track to return the business to profitability and growth “in the medium term”.
“We are pleased with these results as they demonstrate that our strategy is working,” said Mills.
“We continue to see positive customer engagement and it is particularly gratifying to win new business based on our core technology in existing and new applications.
“The business is well capitalised, and we have a strong order book. The success we have had throughout the year leaves the business well-positioned and we continue to be excited by the future. We have great technology, great people and our products are market leading.”
Xaar’s share price fell by 6.3% in early trading this morning (27 April) to 141p but had since rallied slightly to 145.38p at the time of writing.
Unveiled alongside the results and available immediately, Xaar said its new Nitrox printhead will provide users with greater print speeds and uniformity “to deliver unparalleled performance across a wide variety of print applications”. These include ceramics, glass, labels and packaging among others.
The latest addition to the company’s ImagineX platform, which sets the roadmap for Xaar’s bulk inkjet innovations and printhead developments, the head features firing frequencies of up to 48kHz which enables print at up to 100m/min.
Xaar’s TF Technology recirculation is said to minimise any temperature changes within the printhead, “virtually eliminating print density variations and controlling viscosity to provide consistent printing across the swathe throughout each job”.
The head is said to print “extremely reliably”, whether in vertical or horizontal mode, or even when being positioned by a robotic arm with accelerating and decelerating speeds.
Xaar Nitrox is backwards compatible with the Xaar 1003, which will also remain available, while the three variants of the Nitrox head – Core, Pro and Elite, are said to provide customer choice and flexibility for a range of different print needs.