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Date: Wednesday 20 Aug 2008

LONDON (ShareCast) - Printing group Xaar posted slightly higher interim profits but warned that lower sales in China could impact second half profitability.

The group said it is not immune from the current international economic issues affecting the global printing market. Specifically, there is increased uncertainty with the demand from China for its Platform 1 products over the next few months.

“We now believe sales to China will be lower than previously expected for the second half of the year and this will have some effect on second half profitability,” said chairman Paul Lawler.

Profit before tax increased to £3.8m from £3.1m in the same period last year despite lower than expected sales into China, which resulted in turnover falling to £22.5m from £23.4m before.

“We have excellent new technologies that are clearly of significant commercial value and will play a leading role in the continuing market transition to digital inkjet printing,” said Lawler.

“I therefore remain confident that, despite the current uncertainties, we have an exciting opportunity that the company and its staff have the ability, resources and products with which to succeed,” he added.

The group said a maiden interim dividend of 1p per share will be paid.

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