Xaar updated the market last week that trading has been below expectations since the end of June. This has been driven by slower than anticipated adoption of the wellreceived new 1201 printhead and a continued aggressive decline in revenues from Xaar’s legacy ceramic tile printing market. The H1 18 results saw a fall in adjusted operating profit from £7.8m to £3.1m, a reduction in net cash to £36.8m and a rebasing of the dividend to 1.0p. We have cut our estimates to reflect the current difficult trading environment, and now forecast adjusted operating losses for FY18 and FY19. However we would expect these forecasts to increase once the strategic review of the Printhead business is completed, whether due to partnering or to further cost reductions. The results are disappointing, but strategic progress to drive future growth has been encouraging. This includes the new partnership with Stratasys for 3D printing and the announcement by OEM, Windmöller & Hölscher, that it will use Xaar’s new 5601 printhead for the flexible packaging market.
