Cleaning technology business issues profit warning
Water cleaning technology group, Xeros, has warned delays to overseas projects means it has had to cut its revenue expectations for FY24 and FY25 to £0.5m and £3.8m respectively.
The Rotherham-headquartered group has also revised its expected adjusted EBITDA loss to £4.2m for FY24 and £1m for FY25.
Xeros explains its Indian domestic laundry licensee, IFB Industries Ltd, was conducting field trials on a 9kg washing machine, ahead of a planned mass market launch in 2024, which would have delivered first royalty revenues to Xeros in FY24.
However, IFB has initiated a further change to the specification of the 9kg machine, not related to Xeros technology, with the Board now expecting the mass market launch to take place in 2025 instead.
This situation has been compounded by recent confirmation of a change in leadership in the Home Appliances Division of IFB.
Xeros has also flagged up planned new French legislation for microfibre filtration in washing machines. France was expected to lead the way with this legislation, effective 1 January 2025, detailing clear standards and efficacies for new filtration technologies and driving early adoption.
While the filtration legislation is in place in France, the standards and efficacies relating to it remain unclarified.
As a result, this is not expected to drive demand for Xeros’s XF3 technology in the short-term, as the group’s Board anticipated earlier in the year.
A spokesman for Xeros said: “While the Board is disappointed by these delays and their impact on the group’s short-term financials, the medium-term outlook for the company continues to strengthen.”
The group anticipates cash balances as of 31 December 2024 of £2.9m. It adds that it maintains tight control on costs and expects to reduce selling, general and administrative costs further in 2025.
Cash at 30 August 2024 was £4m, which the group expects to be sufficient to finance operations through to month-on-month cashflow break-even, during the latter part of 2025.
Also today, Xeros has confirmed it has signed a contract with Donlim Group to manufacture its XF3 External Filter under licence.
It has entered a strategic partnership agreement with Donlim, combining the expertise of each party to maximise marketing and distribution and to work together on further product development.
Donlim will receive a licence to manufacture and distribute the XF1, which is the internal filter for domestic washing machines.
Donlim, the owner of the Morphy Richards brand, is a manufacturer of electrical appliances, employing over 26,000 people and generating revenues in excess of US$2bn.
Neil Austin, CEO of Xeros, said: “This strategic partnership and contract with Donlim forms a key part of our commercialisation plan.
“While we are hugely excited by the wider possibilities for our collaboration, in the short-term we will focus solely on helping Donlim bring XF3 to market successfully.
“Accessory sales of external microfibre-capture devices for domestic washing machines are forecast to be significant in Europe in the next few years, and XF3 is the perfect plug and play solution to meet this demand.
“Working with Donlim not only enables scaled production but allows us to work together to promote wider industry take up.”
Lydia Zhu, Donlim sales vice president, added: “We are excited to be working with Xeros to manufacture and market the XF3, which we see as an entry point into further innovative, green technologies.
“Our agreement brings together the expertise of two leading businesses. Xeros’ unique and substantive expertise in microplastic filtration IP, prototyping, and scientific capability in developing innovative, green technology, fits perfectly with our ambition to bring new energy and water efficient products to market.”
