Xaar Share News (XAR)

Inkjet printing head technology developer Xaar produced a sharply improved performance but a lack of capacity means that it will be difficult to grow as quickly this year. Revenues grew by one-third to £54.7m in 2010, although the comparative figures were adjusted because sales to the Chinese distributor are now only recognised when the equipment is sold on. The underlying profit rose from £2.1m to £5.6m. The total dividend was maintained at 2.5p a share. Net cash was £22m at the end of 2010 following the £13.9m raised from a placing at the end of last year. Much of the growth from the P3 print head is coming from the ceramic tile printing sector. There are other potential industrial markets but without the capacity to satisfy demand Xaar is holding off from developing them. The £22.2m of capital investment at Huntingdon has started but there won't be a significant capacity increase until late in 2011. Royalty revenues from Japan were strong last year helped by the strong yen. The earthquake in Japan is likely to hit first quarter royalty revenues with short-term power cuts continuing to hamper production. House broker forecasts a rise in profit to £8.5m in 2011 but it reckons that when the new capacity starts coming on stream in 2012 the profit could jump to £14.1m.