Filtronic returns to profit

The Leeds-based firm reported a​ marked improvement in trading with sales increasing sharply, particularly in Filtronic Wireless. ​It said this is a direct​ ​result of the actions taken over the past 18 months to restructure the business​.

Filtronic Wireless reported sales of £18.7m, up from £1.9m the previous year.

​Overall sales more than quadrupled from £4.5m to £21.6m and the group made an operating profit of £1.8m against a loss of £4.​3​m the previous year.

Chairman Reg Gott said:​ ​“We have made good progress in a relatively short period to return the business to profitability and we​ ​are encouraged with the growing opportunity pipeline.

​"​The improved revenues, better product margins and lower overheads have enabled us to report a return to​ ​profitability and a cash inflow from operations. However, we would caution that the phasing of customer​ ​order fulfilment for 2017 has been significantly biased to the first half and, consequently, we expect​ ​revenues to be lower in ​the second half of​ 2017.​"​

​He said that both ​Filtronic Broadband and Filtronic Wireless have seen an improvement in ​the​ opportunity pipeline.

​"​We have set ourselves the objectives of diversifying​ ​our customer base and broadening our product range in order to reduce our dependence on mobile​ ​telecommunications infrastructure Original Equipment Manufacturers (OEMs) whose business has​ ​historically been very lumpy and difficult to forecast.​"

Filtronic​ ​Broadband ​recently​ secured its first major supply agreement in the defence and aerospace sector​ and it expects​ initial, small revenues from this new multi-year agreement to start in ​the second half of​ 2017 with more substantial​ ​contributions from 2018.

The ​group said the UK’s decision to leave the European​ ​Union ​is expected to have a ​​relatively minor​ impact on the firm​, given the international nature of ​its​ trading​.

It has seen a modest gain from the fall in the value of sterling as the majority​ ​of ​its​ sales revenue is in US dollars.

​"We have made good progress in a relatively short period to return the business to profitability​ ​and we are encouraged by the growing opportunity pipeline​," said Mr Gott.

"We are confident that we are on the right​ ​product and technology pathways, and see many exciting opportunities in our chosen target markets.​"​

​The group said it is working hard to secure new customers for ​its​ latest generation of antenna product​s and​ ​ha​s​ made good progress in building a pipeline of opportunities. ​"​However, we are mindful that until our customer​ ​and product base are further widened we are likely to see ongoing short-term volatility in our revenues and​ ​profitability​," said Mr Gott.

T​he group's CEO Rob Smith said: ​"Over the recent past our focus has been on developing OEM business in the mobile telecommunication​ ​infrastructure market and during the first half of our financial year we delivered significant volumes of​ ​integrated antennas to our lead OEM customer.

​"​This has been the main driver of our growth so far this year​ ​and the successful execution of this programme has been a major achievement for the business that helps

establish our credibility in this segment of the market.​"

H​e confirmed that​ the profile of​ ​orders for the current financial year has been weighted to the first half and therefore ​the group​ expect​s​ a reduction​ ​of volumes in the second half as the current orders for this product come to an end.

​"​Having strengthened our sales team, we have recently engaged with several mobile network operators to​ ​introduce our new antenna products​," said Mr Smith.

​"Whilst these engagements are at a relatively early stage we have​ ​received positive feedback and interest in our innovative technology approach that offers significant​ ​operational advantages over our competitors.​"​

​Filtronic said that​ new spectrum releases in the US (600 MHz) and Europe (700 MHz and 1400 MHz) to increase network​ ​capacity is expected to generate further infrastructure equipment expenditure and ​it​ will releas​e​ new, more advanced, antennas that address these opportunities at the Mobile World Congress exhibition at​ ​the end of February.