Xaar Regulatory News (XAR)

Xaar plc

Trading Update

Xaar plc ("Xaar"), a world leader in industrial inkjet technology, provides a trading update today.

Further to our interim results statement in September and our earlier trading update in July, in which we indicated that growth in revenues from new products was expected to be second half weighted, the board now expects that revenue in the second half year will be broadly in line with the first half. The shortfall against previous expectations results largely from fewer than planned new printer installs of Xaar's 2001 Printhead, and slower than anticipated ramp up of the Xaar 1201 Printhead due to supply constraints.

In ceramics, the printhead replacement business is now anticipated to represent c.70% of revenues in 2017. The new 1003 Printhead has performed strongly in this market but as competition for new printer installs continues to intensify, we have seen more limited success with the 2001 product.

Demand for the 1201 Printhead remains strong, but due to supply constraints, we have not been able to fulfil all of the demand this year. We expect supply will improve with new capacity coming on stream next year, and we continue to expect significant growth in 2018.

Although disappointed by the revenue shortfall on the underlying business, we are encouraged by our reducing dependence on our legacy ceramics business, where there is little visibility, and increasing competitive pressure. Our 2020 vision and commitment to delivering growth from new products in new markets is undiminished but the timing of ramp up of the range of new products we have introduced remains less predictable. In 2017 we expect that 80% of our underlying revenues will be from the seven new products introduced and new businesses acquired in the last two years. This progress, together with our previously announced increased investment in sales and marketing, supports our continuing transformation to a more diversified and customer-centric company.

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About Xaar

Xaar is a world-leader in the development of inkjet technology and manufacture of piezoelectric drop-on-demand industrial printheads. The company also develops and sells ink systems, electronics and fluid optimisation services to accelerate inkjet system development and adoption. Xaar printheads incorporate patented technology, which delivers unbeatable performance when decorating, patterning, depositing functional coatings on, or adding structure to, a variety of industrial and consumer products. Today leading manufacturers worldwide, in sectors ranging from ceramics, wide-format graphics and labels to direct-to-shape packaging and decorative laminates, choose Xaar's printheads because they are extremely precise, exceptionally versatile, incredibly reliable, and designed for high-volume production. Additional information about Xaar is available at www.xaar.com