Filtronic confident about the future despite Covid impact

The Leeds-based company said it commissioned a number of capital investment projects and met all key customer deadlines on a number of very significant engineering development projects.

However, the measures it took to remain fully operational hit its productivity and efficiency as time went by and consequently profits suffered over the fourth quarter of its financial year (March, April and May).

The firm said it was therefore very pleased to deliver annual results in line with market forecasts.

Group sales from continuing operations rose 8 per cent to £17.2m in the year to May 31. The group made a pre-tax loss of £400,000, down from a £100,000 profit the previous year. An adjusted operating profit of £400,000 was achieved before exceptional items.

Reg Gott, Filtronic's chairman, said: "Whilst our end markets held up reasonably well during the lockdown period, enabling us to maintain delivery continuity, new business development and acquisition became progressively more difficult. Many of our customers had increasing difficulty in firming up future commitments, leading to a number of programmes being pushed out.

"Consequently, we entered the new financial year with a high level of confidence in our ability to perform under the restrictions presented by Covid-19, should conditions deteriorate again, but with a higher degree of uncertainty around customer requirements in terms of volumes and delivery schedules."

He said that the firm's key strategic objective has been to broaden the customer base and product portfolio.

"The business demonstrated resilience and effective management through the recent phase of the Covid-19 pandemic but, like our peers, we are cautious on the immediate outlook with the full economic fallout of the crisis unknown," he said.

"However, we remain confident in the underlying fundamentals of the business and look to pursue the opportunities that present themselves to create long-term value for shareholders.”

Analyst Lorne Daniel at FinnCap said the results showed resilience through a challenging period.

"Even with the distraction of settling a warranty claim, the sale of the antenna business, management change, and finally a pandemic, the ongoing business still grew revenue and profits year on year," said Mr Daniel.

"Contract wins have been impressive through the year, and despite orders slowing in the fourth quarter lockdown, the year end order book matches the opening order book and was since boosted by a £4.9m follow-on order to its lead defence customer.

"Management rightly remains cautious on the immediate outlook with the economic impact of Covid (and Brexit in January) as yet unknown, so our forecasts remain under review. However, in the longer term, the underlying fundamentals look very healthy, with exciting opportunities to build value in the targeted markets."