- Revenue for full year 3% lower than 2013
- More competition leads to lower pricing in ceramic
- Other products not ramped up enough to compensate yet


Industrial print-head group Xaar has lowered its guidance for full-year revenues and profit margin after the exceptional market for ceramic tile manufacturing returned to more normal levels.

The FTSE 250 company said revenue for full-year 2014 would be around £130m, or 3% lower than the £134m achieved in 2013, and weighted more to the second half.

It said sales volumes to the ceramic tile market stabilised, in line with previous guidance, but that more aggressive pricing from competitors has led to average pricing falling, hitting margins.

With research and development investment also increasing during the year, offset by beneficial capitalisation of its forthcoming Thin Film development costs, Xaar said adjusted operating profit margin would be 28%-29% versus the 30% from last year.

As well as ceramic sales being lower, its packaging market saw primary labels sales weaken, although coding & marking sales remain stable.

In other applications Xaar said the expected growth in sales has "not yet materialised", though it still expects progress in the second half, especially from the 'Direct to Shape' application.

Broker N+1Singer reduced forecasts for adjusted profit before tax and diluted earnings per share by 13% for 2014, 12% for 2015 and 12% for 2016.

"While near term profits have disappointed, we believe prospects for longer term growth from new applications have strengthened."

Shares in Xaar were down 17.5% to 612.25p at 08:19 on Tuesday.

OH

Related share prices
Xaar (XAR) share price