Xaar sticks with 2020 growth plans

Jo Francis
Wednesday, March 21, 2018

Xaar hopes to make “at least one” acquisition this year and the business has maintained its ambitions to boost sales by more than £100m in order to achieve its 2020 growth target.

Speaking as the inkjet manufacturer announced its 2017 results, chief executive Doug Edwards said the firm’s latest printheads also had the potential to add substantially to sales.

In the spring of 2016 he set a 2020 turnover target of £220m, but the group’s results for last year were hindered by manufacturing issues that delayed the roll-out of the its new 1201 printhead.

“We are sticking with our 2020 vision, and expect half of that sales growth to come from acquisitions, and the other half to be organic,” he said.

“We have products that can get us there in terms of organic growth, the challenge is predicting which one and when. But we do believe it is do-able.”

Edwards said the 1201 printhead could have a run rate of £25m-£30m, while the 5601 “could be north of £50m”.

He described the 1201 as already “recapturing market share in the wide-format graphics space” for the business.

The £20m licensing deal with Seiko announced last year will help fund Xaar’s aspirations to add further bolt-on acquisitions, and it is also looking at partnerships in areas such as 3D printing.

“We’ve looked at a number of companies, but we’re not going to do deals just for the sake of it, it needs to be strategic and it needs to make sense,” Edwards added.

For the year to 31 December 2017 sales at the Cambridge-headquartered group nudged up by 4% to £100.1m. 

Gross profit increased by 5% to £47m, but operating margins fell from 18% to 12%.

The firm has net cash of £44.7m.

Xaar has been striving to reduce its reliance on the ceramics market, and has now reached a point where 80% of product revenues are coming from recently-launched products, and from the EPS direct-to-object business acquired in 2016.

Development kits for its 5601 single-pass thin film printhead have now been delivered to ten OEMs in the textiles, commercial, and packaging printing arenas. Xaar showed four-colour output from the head at the InPrint industrial printing expo last November, and Edwards said he expected the 5601 to “unlock the conversion of very large and established analogue industrial printing markets”.

“We are working with big players who are market leaders in each application area,” Edwards stated. “With the 5601 a lot of people are looking ahead to Drupa, and to next-generation presses that will incorporate our printhead.

“They are now in the process of integrating the head and that takes a bit of time, it’s a sophisticated product.”

In the area of direct-to-object printing the EPS technology is being used for a wide variety of applications including printing onto domestic appliances, medical devices and toys, and the EPS has a new product for printing directly onto glass items such as beer glasses.

“Direct-to-object printing is largely analogue today, and is going digital pretty rapidly,” Edwards said.

Edwards also reported “a lot of interest” in Xaar’s high-speed sintering technology for 3D printing, with more news in this area to follow by summer.

Separately, Xaar’s High Laydown (HL) technology developed for the ceramics market has additional potential applications in packaging, for dimensional effects such as Braille, and in print-and-cure for 3D printing. “The more material they can lay down, the faster they can build parts,” he added.

The 5501 bulk piezo printhead collaboration with Xerox “contributed significant revenues in the second half”.

Xaar’s share price rose by 32p, or nearly 12%, to 300p on the news (52-week high: 509p, low: 260.5p).

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