Filtronic wins major defence contract

Analyst Adrian Kearsey at Panmure Gordon said the deal with a major, unnamed European defence equipment manufacturer highlights the success of the Leeds-based group's initial defence contract and further diversifies both the customer base and revenue profile.

Filtronic Broadband will supply specialist high frequency transmit and receive modules for the defence related aerospace application.

Filtronic said production of the modules will take place at its certified, highly automated manufacturing facility in Sedgefield and is expected to commence in the first half of 2018. The agreement provides for additional volumes should Filtronic's customer secure follow-on project wins with its end-customers.

Rob Smith, Filtronic’s CEO, said: “We are delighted to have been selected to work on this project.

"This is Filtronic Broadband’s second major business win in the defence and aerospace sector and along with other smaller contracts, demonstrates our commitment to diversify the customer base and markets we serve, to become a major supplier of advanced communications components and sub-systems to this and other adjacent markets.”

Mr Kearsey said: "Due to client confidentiality, Filtronic has provided limited details on the contract. However, the move is clearly significant. Firstly, the defence deal adds further momentum to the Broadband segment of the business, highlighting the broadening scope of the product offering. Phasing of shipments will commence soon, with completion due within three years. Although there is a probability that completion will be within two years.

"Following the full year results we expressed our excitement for the growing momentum within the group but highlighted that we were mindful that Filtronic needed to convert the pipeline to drive sales materially higher.

"Today’s announcement represents another important step forward in achieving this pipeline conversion. The transformation of Filtronic - both operationally and in terms of product positioning - is clearly taking important steps forward."

He said that over the coming months, he expects this will be reflected in the group's share price as investors recognise the increasing value of the technology and the opportunities to broaden the client base.