The company said strong growth in its ceramic tile printing products between January and May 2013, had contributed to a projected 50% year-on-year increase in its full-year revenue, to £86.3m.

It follows a record year in 2012 with revenue increasing by 26% on 2011 and a 74% increase in adjusted pre-tax profits.

Chief executive Ian Dinwoodie said: “All applications are growing in industrial, packaging and graphic arts. The strongest growth is in ceramic tile decoration where we are seeing a major and significant industry shift from analogue to digital – the fastest and highest penetration we have ever seen – which we expect to continue for the next three years or so.”

Dinwoodie said that despite the global economic crisis, Europe had also continued to show fairly strong growth, but that the real acceleration was in China.

“China is picking up very strongly for ceramic tiles now because half of the world’s ceramic tiles are produced there. We are definitely moving in the right direction,” he added.

In its trading update Xaar said it was accelerating research and development investment “to expand the conversion potential of analogue processes to digital inkjet across a range of markets”.

The company said it would invest more than £12m in R&D in 2013, but added that while the growth in R&D was expected to broadly match the percentage increase in revenue, a higher rate of revenue growth would result in a strong operating margin.

Meanwhile, the company’s expertise in 3D print technology has led Xaar to be included in one of 18 projects announced last week as the winners of £14.7m worth of investment.

With £8.4m to be funded through the government’s Technology Strategy Board and a further £6.3m to come from private sector investment, the funding has been committed to further the development of 3D technology for manufacturing industries.

Xaar is working with a consortium including FaraPack, Unilever Central Resources, BAE Systems, Cobham Technical Services and Marker Block on a project that will develop structural parts for industries including FMCG and aerospace.

Xaar’s will develop and deliver specialist printheads as well as knowledge and expertise in additive manufacturing to the project.

Dinwoodie said: “We’ve been involved in 3D printing for over 10 years and there is a lot of hype about it at the moment.

“This project is some years away from commercialisation but it is interesting that money is being pushed into it and we will continue to support the consortium and see what it develops into.

“For us 3D print revenue is a number of years away but it could well be a growth area. Like many of these advanced manufacturing applications that are emerging there isn’t that much business for them at the moment but five to 10 years from now, who knows?”