Following the trading update announced this morning, shares in Xaar sank by nearly 30% to a new 52-week low of 61.8p.
The Cambridge-headquartered inkjet technology group said that it had reassessed the “realisable value” of its Xaar 1201 printhead inventory and would make a near-£6m provision as a result.
“We now consider it prudent to make a provision of £5.7 million which will be reflected in our first half results,” the firm said in a statement.
First-half sales were £22.5m, in line with the firm’s previous update in July.
However, Xaar warned that trading for the rest of the year “is expected to be weaker than previously anticipated”, mainly due to lower sales of the 1201 and 2001 printheads “as a result of slower than expected new printer installs by OEMs and credit and sales channel issues on Xaar 1201”.
Sales for the second half of the year, which were £28.2m in 2018, are now expected to be “similar to those in the first half”.
Xaar said it was deferring its interim results announcement from 10 September to 26 September, in the expectation that the additional time would allow the firm to provide “a more meaningful update on progress” regarding its search for a strategic investor for its thin film printhead business.
“Management continues to focus on its strategic negotiations and expects that some additional time could enable the board to provide a more meaningful update on progress, including any effect this may have on our interim results statement. Hence we are deferring the announcement of our interim results to 26 September from the previously announced date of 10 September,” the firm stated.
Struggling Xaar issued two profit warnings last year. It ended up canning its final dividend and posting a near-£15m loss for 2018.
A year ago, when the firm was forced to reset its 2020 growth plans, Xaar’s share price was 189p. The 52-week high is 199p.
Xaar had net cash of £21.6m as of 30 June.