Filtronic is back on track after pandemic delays

Mobile phone technology firm Filtronic has reported an improvement in second half trading and said earnings for the year to May 31 will be ahead of market expectations.

Filtronic designs and manufactures antennas, filters and mmWave products

The Leeds-based company said that following a softer first half, trading improved in the second half of the year to deliver revenue broadly in line with market expectations. A favourable sales mix at higher margins delivered earnings slightly ahead of market expectations.

The firm now expects to report 2021 revenue of approximately £15.6m, down from £17.2m the previous year and earnings of £1.8m, up from £1.2m the previous year.

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Analyst Lorne Daniel at Finncap said: "Filtronic continues to impress. The year end update reveals excellent second half profitability and a very good full year, demonstrating its resilience to Covid, management change and component shortages through profits and significant cash, as well as a Queens Award for Enterprise.

"Full year revenue was just shy of forecast, but the earnings and cash generation comfortably beat expectations, leaving £2.8m net cash at the year end to fund investment in sales and marketing again, post-Covid."

Filtronic said the final quarter benefited from a recovery in demand for critical communication products as Covid-19 related delays to new installations and system upgrades in the US started to ease.

Demand in the aerospace and defence market remained stable and the group said it is making good progress with product development programme wins.

However, the roll-out of 5G networks proved challenging during the pandemic and some countries have consequently delayed the release of E-band licences necessary for the deployment of its products.

Filtronic said it was extremely pleased to close the year by being recognised with the prestigious Queen’s Award for Enterprise in International Trade 2021. Filtronic’s award recognised the growth in export sales of its microwave and mmWave solutions as a key enabling technology for initial 5G deployment.

Richard Gibbs, Filtronic's chief executive, said: "Across the year our markets progressively regained composure and notwithstanding ongoing disruptions from Covid and Brexit, they are now starting to show some welcome signs of recovery.

"Our recent performance demonstrates the core strength and underlying robustness of the Filtronic business. Despite some concerns associated with delivery of key semiconductor components, we start the new financial year with a strong order book and cause for optimism."