Cambridge-based digital printer Xaar was one of the best performing shares in the FTSE 350 in 2013, after its shares rose almost 300 per cent over the year

February 3, 2014 5:24 pm

Bullish printer enters the China shop

By Tanya Powley, Manufacturing Correspondent


It may have taken thousands of years for Chinese ceramic makers to embrace new technology – but one UK printing pioneer has needed only 12 months to capitalise on their break with tradition.

Cambridge-based Xaar

was one of the best performing shares in the FTSE 350 in 2013, after its shares rose almost 300 per cent over the year to £11.20 driven by three large successive profit upgrades.

The manufacturer is forecast to more than double its revenue from £86.3m to around £136m for 2013 after it experienced a faster than expected conversion to digitalprinting of the Chinese ceramic tile market.

Its rapid growth – which also saw the company promoted to the FTSE 250 last year – stunned the City. Even its own chief executive Ian Dinwoodie was taken aback.

“We were surprised by just how big the growth was last year,” says Mr Dinwoodie at his Huntingdon factory. “The message we were getting from our Chinese customers didn’t seem to suggest there would be a particularly fast take-up that year.”

Mr Dinwoodie jokes that he and his management team have been waiting for years for the digitalisation of the print market. “We keep hearing the digital printing revolution is about to happen and then it doesn’t,” he says. However, by the end of 2013 around 40 per cent of ceramicprinting had converted to digital, and Xaar expects this to rise to 80 per cent by 2015.

The potential for Xaar is huge. Almost all of the products we consume – from plastic bottles and biscuit boxes – the books we read to the tiles and laminate flooring in our homes are printed in some way. More than 3tn sq m of products – the equivalent to the surface area of India according to Mr Dinwoodie – are printed and decorated globally each year.


But most of this printing – around 97 per cent of the market – is still produced using traditional analogue techniques. Xaar’stechnology – digital industrial ink-jet printing heads – is cheaper, more precise and easier to use. Yet only 1 per cent of printing today is done this way.

Like many so-called “disruptive” technology businesses before it, the road to making the most out of a promising new technology has not been an easy one for the 24-year-old company.

Xaar was founded in 1990 out of Cambridge Consultants, the product development company. It initially started life as a technology licensing company, set up to commercialise a new method to print high-quality images on to paper, plastic and other materials, aimed particularly at the advertising and consumer goods industries.

Timeline: the rise of Xaar

● 1990: Xaar launches as a technology licensing business after being spun out from Cambridge Consultants, a product development company

● Mid-1990s: Sold licences to IBM, Brother, Toshiba-TEC, Konica Minolta, Seiko Instruments and others

● 1997: Launches IPO to raise funds to move into product manufacturing

● 1998: Purchases ex-IBM ink-jet manufacturing group in Stockholm, Sweden

● 2005: Total annual sales at £43m after it saw growth in its graphics division

● 2007: Second manufacturing plant created in Huntingdon, Cambridgeshire

● 2007: Ends takeover talks on a potential 200p-220p offer from US industrial conglomerate Danaher, claiming it undervalued the company

● 2008: Xaar’s shares fall 36 per cent to 116½p in July after it warns of slower sales of its core products into China, its main market

● 2010-2012: £22m invested in expanding Huntingdon plant, and revenue increases to £86m

● 2013: Shares soar almost 300 per cent over the year following three consecutive profit upgrades as China demand increases. EntersFTSE 250

Quick facts

●More than 90 per cent of products sold by company are exported

●Employs about 800 people

●Headquarters in Cambridge, factories in Stockholm and Huntingdon

●About 40 per cent of its shares are held by fund management houses

It quickly sold licences to the likes of IBM, Brother, Toshiba-TEC, Konica Minolta and others. But after a disappointing royalty stream from these licenses, Xaar floated on the stock market in 1997 to raise funds to enable it to start manufacturing its own products.

The company has faced several difficulties: the slow conversion to digital and increased competition from large Japanese electronics equipment groups – the same companies Xaar sold its licenses to a decade earlier. These companies have stepped up their use of the technology and used their factories in Asia to drive down prices and gain market share.

Although growth is likely to be around 5 to 10 per cent this year, Mr Dinwoodie is confident Xaar will maintain its position as market leader as momentum builds in digital label printing – a market 20 times larger than graphics or ceramic sectors.

Andy Cook, chief executive officer of FFEI, a Hemel Hempsted-based printing equipment maker, said it uses Xaar’s print heads because of their reliability. “You get things like nozzle failures with other manufacturers,” explains Mr Cook.

One area within the packaging sector Xaar is particularly excited about is its “direct to shape” technology, which allows printing direct on to bottles and containers of any shape, rather than the traditional method of printing a label which is then stuck on to the container.

This could cut down the time it takes for consumer good companies to get their product to market from around 12 weeks to just a few days.

The first field trials are taking place this year with well known – but unnamed – brands, and if successful, Mr Dinwoodie says commercialisation could take place in a couple of years.

Xaar has spent the last few years gearing up for higher production – it is increasing capacity at its Huntingdon factory by a further 75 per cent – as well as developing a new printhead that will enable it to enter new markets such as textiles and books.

Thomas Rands, analyst at Investec, says Xaar’s management have made clear that the ceramics market has reached a steady state of conversion and is therefore unlikely to see a repeat of the same levels of growth this year.

“The main thing is this is a disruptive technology, so growth will come in waves. I think next year could be another good year, driven by digital label printing and its direct to shape printing,” he said.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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