Shares tumble at Filtronic

Shares in the Leeds-based firm fell 10 per cent to close at 9.88p after the company said revenue is expected to fall from £21.6m to £12.8m in the six months to November 30.

Filtronic’s CEO Rob Smith said: “As stated in previous announcements, sales are expected to continue to be lumpy until we further broaden our customer base and the markets we serve.

“However, we are pleased with order intake and new contract wins in both businesses during the period, which support our strategic development goals.”

Filtronic Wireless saw revenue fall from £21.6m to £11.0m and Filtronic Broadband saw revenue fall from £2.9m to £1.8m, generating an expected operating profit of around £900,000, down from £1.8m in the first half last year.

The group reported strong cash generation with a net cash balance at the period end of £2.9m, up from £700,000 the previous half year.

Filtronic said that although this represents a reduction in performance, it is broadly in line with the group’s expectations and reflects projected phasing of order fulfilment across the year.

It said it has seen a slightly slower than expected ramp up from its recently announced defence contract wins which has pushed the first volume deliveries out of the first half and into the second half.

The group is expected to publish its half-year results on January 30.

Analyst Sanjay Jha at Panmure Gordon said: “Filtronic, the designer and manufacturer of microwave electronics for the wireless telco market, has today reported that it is trading broadly in line with expectations in the first half of the year.

“More importantly, the management is making progress with its strategic goals, with both business segments recording good order intake and new contract wins during the six months ended November 30.

“Thanks to strong cash generation, the company continues to maintain a strong balance sheet with net cash of £2.9m.”

Mr Jha said that although these figures represent a decline, this is not reflective of a trend and is consistent with previous announcements that sales will continue to be lumpy until the company broadens its customer base and markets.

In August, Filtronic announced a significant defence related contract worth £4.8m of sales over three years.

T​he deal ​with ​a major​, unnamed​ European defence equipment manufacturer​ ​will help diversify 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.

Mr Smith ​said​ at the time:​ “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.”