Strong signals from Filtronic as it sees good 5G demand

The Leeds-based firm told shareholders at its AGM that trading for the first half of 2020 is anticipated to be in line with its expectations.

Order input levels across its portfolio of public safety, 5G backhaul and defence products have all shown improvement over the first half of the prior year. 5G backhaul means getting the data ready so it can be distributed (from a cell tower) over the 5G network.

The firm, which designs and manufactures antennas, filters and mmWave products for the commercial wireless telecoms, critical communications and defence electronics markets, said the sales process of the telecoms antenna operation continues. It said the board will update shareholders when appropriate.

Executive chairman Reg Gott told investors: “To support the improving order book approximately £1m has been invested in increasing manufacturing and test capacity which also improves our capability. This is in addition to further investments in engineering resource to address new opportunities.”

He also said the recently announced settlement of a $2m (£1.6m) warranty claim will be paid in four instalments up to the end of 2020. The first instalment has already been paid and the second will be paid at the end of November this year.

He said the payment schedule is fully factored into the group’s cash management planning.

Analyst Lorne Daniel at FinnCap said: “It is pleasing to see first half trading is in line with expectations, with encouraging demand in continuing business lines.

“First half orders across the range of public safety, 5G backhaul and defence markets have all improved year on year.

“To cater for the growing demand, notably in 5G backhaul, £1.0m has been invested in both manufacturing and testing capacity – in addition to the recruitment of engineers to address the new market opportunities particularly in defence and public safety.”

Mr Daniel also welcomed the Mr Gott’s temporary move to executive chairman following the departure of chief executive Rob Smith earlier this month.

”The executive chairman seems to be settling into his new role since the departure of Rob Smith and there is no further news on the progress of the sale of the telecoms antenna operation,” he said.

”The first instalment of the $2.0m warranty claim settlement has been paid, with a second due by the end of this month. There are two further instalments next year and the schedule is fully factored into cash planning. We make no changes to forecasts or target price at this stage.”

Filtronic put out a statement after the AGM to say that all resolutions were duly passed.

Mr Smith resigned with immediate effect on November 1 after five years with the company. Mr Gott has taken over as executive chairman whilst a search for a new CEO commences.

At the time, Mr Daniels said: “Rob feels that after guiding the company through a difficult period, settling the warranty claim and wrestling with the future of the Telecom Antennas Operation (never a dull moment in his words), now is the time for him to look for fresh opportunities and to hand over to someone else to take the company forward.”

Mr Smith said: “I have greatly enjoyed my five years at Filtronic. It has been full of challenges with never a dull moment.”