LONDON (ShareCast) - (ShareCast News) - Profits at Xaar fell in 2017 as a result of shrinking margins and delayed product launches but the inkjet printing technology manufacturer remained confident of growing the business.
The Cambridge-based group posted a 31% fall in pre-tax profits to £12.3m in the year ended 31 December, despite revenue picking up 4% to £100.1m, as a result of restructuring costs and acquisition expenses.

Xaar, which recently demonstrated to a small select group of partners and potential customers a first prototype Xaar 3D printer, saw operating margins contract by six points to 12% as the company continued to reduce its exposure to its under-pressure ceramic tile decorating unit, which made up 37% of its total revenue, down from 44% a year ago.

The firm's net cash balance remained solid at £44.7m, but was down from the £49.3m twelve months earlier.

Director chose to up the dividend payment to 10.2p per share from the prior year's 10p, even though earnings per share came in at 20.7p, 2.36% lower than a year ago.

Chief executive Doug Edwards said, "We are making good progress in transforming Xaar to a more diversified and customer-centric company. Although we have had some challenges during the ramp-up phase of multiple new products, the quality of our business continues to improve."

"We regained share in the Graphic Arts market; our Thin Film technology and our 3D and Advanced Manufacturing sectors demonstrate exciting prospects for the future," he added.

As of 1040 GMT, shares had picked up 8.96% to 292.00p.

Broker N+1 Singer said the numbers were a beat due to the receipt of the £10m of license revenue from the upfront agreement worth £20m with Seiko signed in December in place of a royalty stream, though this deal meant a big impact on 2019 forecasts, taking 25% off PBT.

But 2018 forecasts are unchanged and with 2019 both still indicate growth, with PBT estimated to rise to £12.6m and £14.3m.

Net cash is growing is seen as "giving them plenty of firepower" to drive new product development and M&A, while Singer sees the stock trading on a "significant" discount to the sector.

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