Trials in Europe are expected to boost second-half volume sales at Filtronic

MOBILE phone technology firm Filtronic told shareholders at its AGM yesterday that it expects trials in Europe to lead to volume sales in the second half.

The Leeds-based group’s wireless business helps mobile phone operators upgrade base stations to handle more data.

The firm’s technology allows operators to use their existing network infrastructure to overlay third-generation (3G) and fourth-generation (4G) services.

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Filtronic told shareholders that the wireless business has completed its major UK orders for LTE interference mitigation filters and is now providing trial material to other European markets.

While network upgrade activity is dominated by US operators, the firm said European enquiries are expected to result in volume sales in the second half. The group said that trading since June 1 has been in line with expectations.

Filtronic has expanded its product development capability through the establishment of an Antenna engineering team in Stockholm at a cost of £700,000.

In the broadband business, the group said a reduction in headcount in June, which involved the loss of 16 jobs to bring the workforce down to 84, reduced fixed costs. The group said that this reduction in numbers, combined with early stage sales in the E-band market, should contribute to a reduced level of losses this year.

The broadband division is switching from its traditional business to new growth products such as E-band.

At the end of last month, the group had net cash of £5.5m, an increase of £3.6m since the end of May. Half year results for the six months to November 30 will be announced next January.

In the year to May 31, the group reported a 143 per cent leap in wireless revenues to £32m helped by a big pick up in the second half when the group made revenues of £20m, up from £12m in the first half.

The massive improvement in the wireless division helped to offset a 38 per cent decline in broadband sales to £8.2m as new products were delayed until 2014.

Filtronic’s chief executive Alan Needle said the broadband business should be profitable by April or May next year as new products come onstream.

Filtronic’s business is being driven by an exponential rise in demand from people using smart phones, iPads and tablets to gain access to the internet.

Mobile data traffic doubled during 2012 and continues to grow rapidly and increasing numbers of data hungry devices such as smart phones, tablets, ebooks and cameras are being used to access ever more sophisticated applications, many of which require video.

Filtronic said that video applications are now projected to grow at 60 per cent a year.