Filtronic recovery reflected in strong second-half results; manufacturing.
ELECTRONICS manufacturer Filtronic plc says it is wellplaced to continue its recovery toward delivering sustainable growth, following a challenging period.
A trading update for the year ended May 31, 2016, shows the company, which has a broadband division in Sedgefield, County Durham, turned over PS13.6m, compared to PS17.5m in 2015.
However, second-half performance was strong, generating revenues of PS9.1m - just over twice the figure reported the previous year.
Likewise, while the business saw year-end net cash of PS700,000 turn to a net debt of PS0.3m, it has confirmed that Barclays Bank plc has agreed to a temporary increase of its invoice discounting facility from PS2m to PS4m, supporting current working capital requirements as revenues grow.
In addition, Filtronic - which designs and makes microwave electronics products for wireless telecoms infrastructure and adjacent markets - has an invoice discounting facility in the US with Faunus Group International Inc of $3.5m.
The board believes these facilities will be sufficient to finance the period of sales revenue growth the company is currently experiencing. The trading update said: "Sales revenue in our Wireless business was PS9m for the year (2015: PS10.3m) with PS7m (2015: PS6.4m) coming in the second half.
"We were pleased to announce a succession of orders for integrated ultra-wide band antennas over the last six months.
"Production of these antennas ramped through the period and during May we started to commission a second production line at our manufacturing partner's factory.
"Initial production margins for this product were low but have significantly improved as we have overcome start-up yield and volume ramp issues."
The company added that it had entered the new financial year with good order coverage, as a substantial proportion of recently announced order wins are still to be fulfilled.
An encouraging demand forecast for these products indicated that "the good momentum achieved over the past six months should be maintained".
The update continued: "Our Broadband business achieved sales revenue of PS4.6m in the year (2015: PS7.2m) as sales of legacy products continued to fall whilst the market adoption of E-band transceivers for wireless backhaul to replace these revenues has been slower than anticipated.
"However, the impact of the reduced sales on operating profit has been largely mitigated by cost-saving measures, implemented in the previous financial year and improvements in product margins delivered during the year under review.
"We are pleased to report that sales of our latest transceiver product, Orpheus, are now growing and from launch in November, 2015, to May 31, 2016, we shipped over 1,500 pieces to our lead customer, from whom we have order coverage until October, 2016.
"Interest from other potential customers is also increasing." Full results for the financial year ended May 31, 2016, will be announced on August 2, 2016.
Filtronic CEO Rob Smith said: "The prospects for both integrated ultra-wide band antennas and E-band transceivers continue to be encouraging and the growing pipeline of enquiries represents a considerable opportunity for the business to continue its recovery toward delivering sustainable growth."
<BRob Smith, CEO of Filtronic