Filtronic on track for solid numbers in first half

Designer and manufacturer of microwave electronics products, Filtronic, posted a trading update for the six months to 30 November on Monday.

The AIM-traded company traded strongly in the first half of its financial year and said it expects to report unaudited revenues for the period of £21.6m, up from £4.5m.

That revenue comprised of Filtronic Wireless at £18.7m, up from £1.9m, and Filtronic Broadband at £2.9m, growing from £2.6m.

The net cash balance at the period end was £0.7m, swinging from net debt of £0.4m.

Filtronic said the improved financial performance was primarily driven by increased sales of its new ultra wide band integrated antennas to its lead customer, following the successful product launch in FY2016, together with improving demand for its mmWave backhaul products and base-station filters.

As it noted in the trading statement made on 29 September, while the board was pleased with the progress made and remained confident on the long-term prospects for the business, it was also mindful that sales are currently concentrated on a small number of customers.

“Roll-out programmes for wireless infrastructure projects are naturally very lumpy and we expect that visibility on the pattern of customer orders will be limited until our antenna products gain greater traction across the broader market,” the board said in a statement.

The Filtronic Wireless division strengthened its sales teams across EMEA and North America to target opportunities with mobile network operators during the period, the board said, and was now seeing a growing pipeline of new business opportunities.

“Over the coming months, we will also be expanding the number of product variants to address new radio frequency releases and the ongoing demand for densification of mobile networks.

“Building business with new customers and the introduction of new products will take time and it is anticipated we will not realise any appreciable sales from these new initiatives until FY2018.”

The board added that Filtronic Broadband continued to see incremental growth in sales of Orpheus, the company's latest generation of E-band transceivers, with strong demand from its lead customer.

“A key objective for Filtronic Broadband has been to diversify its customer base and product offering and to this end, we are working with several new potential customers for Orpheus in both telecommunications backhaul and adjacent markets.

“In addition to E-band transceiver sales, Filtronic Broadband is also gaining traction in the design and manufacture of bespoke filters and the provision of specialist high-frequency assembly and test services for the defence and aerospace markets.”

Filtronic said that while the early orders received for those offerings were modest in size, they represent long-term platform business opportunities that will make an increasingly significant contribution to the division's performance.

Filtronic’s board said it will publish its half year results on 30 January.