Reduced demand leads to £11m sales drop at Filtronic
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Sales and pre-tax profits at Flitronic, the designer and manufacturer of microwave electronics products, have dropped in a year where it saw demand reduce.
Reporting on the year to 31 May, the Shipley-based firm said its revenues dropped to £24m from £35m the previous year; pre-tax profits fell to £1.2m from £2.2m in 2017.
Filtronic Wireless business revenue was £18.4m (2017: £30.5m) with a pre-tax profits of £1.8m (2017: £4m) and Filtronic Broadband business revenue was £5.6m (2017: £4.9m). Filtronic said it had identified a reorganisation of the business to capitalise on opportunities in 5G to leverage operational and engineering capabilities.
Chairman Reg Gott said: “The reduction in sales resulted from a combined impact of lower than expected demand for our customer specific integrated ultra-wide band antennas and delays in the production ramp of our new defence contracts that did not achieve full production capacity until the final quarter of the year. In the second half of the year we also saw a softening of demand for legacy filter products as some of these programme rollouts naturally concluded.
“We are, however, very pleased with the progress made through the year in developing, refining and executing our strategies to prepare the business for 5G deployment and to increase our participation in markets other than mobile telecommunications infrastructure.”
Listed Filtronic said it secured a major development contract with a major OEM to design and supply Massive MIMO antennas during the year, which it said was a key product in network densification using techniques that will form the basis of 5G systems.
It also secured a second major contract win to supply its Tier 1 European defence customer. The contract, valued at £4.8m, is to be supplied over three years.
It has also been approved as a vendor by a major US mobile network operator to supply 5G Evolution antennas and recently qualified by a major Mobile Network Operator in EMEA for another of our antenna products.
Gott added: “We are pleased with the progress we have made along our strategic pathway and our focus on higher margin products and applications has further improved operating profitability over the past year. Our substantial investment in new products and technologies over the past two years has started to deliver on our objectives of broadening our customer base and expanding our product range. This remains a key strategic objective.
“We are gaining increasing market recognition for our expertise in network access and mmWave engineering and we believe this positions us very well to take advantage of the huge opportunities that exist in the future development of 5G networks. Massive MIMO antennas utilise techniques that will be a key enabler of 5G and our recent contract win to engineer and supply these antennas to a major global OEM demonstrates our capability and credibility to take advantage of these opportunities as they arise.”