Filtronic hit by challenging trading conditions

Components manufacturer says results are likely to be affected by delays and curtailment of orders destined for Russia

Alan Needle, chief executive officer at Filtronic
Alan Needle, chief executive officer at Filtronic

Challenging trading conditions in a number of areas look set to hit financial results at Filtronic plc.

The firm, which designs and manufactures microwave electronics products for the wireless telecoms infrastructure market, said in a trading update that, although it was engaged in a number of new product introductions with OEM customers, delays would mean lower than expected sales revenue in the short-term.

The company said: “Based on the anticipated timing of these new product introductions, sales revenue for the financial year had been projected to increase month on month through the current financial year with a heavy weighting to the second half.

“A significant element of the growth had been expected to be generated from an advanced integrated antenna incorporating Filtronic filters and combiners.

“The development of this product has been delayed due to technical issues that have arisen during final product testing and qualification.

“Whilst we are implementing solutions to these issues, the delay will mean that the antenna will now enter production at least four months later than anticipated.”

In addition, a significant expected order had not been received and two programmes with a major OEM had been delayed into the next financial year.

“Due to the impact of the programmes affected, the board now expects that the results for the Wireless business in the current year will be substantially lower than current market expectations,” the trading update said.

Filtronic’s broadband business, based in County Durham, meanwhile, had traded marginally lower than in the first half of the previous financial year and slightly below the level the company had expected.

The update continued: “The business has been adversely affected by the curtailment of orders from our customers selling to Russia, a market that had been an early adopter of E-band and V-band technology.

“The board believes that demand for E-band and V-band products will grow in the coming years as this technology is adopted more widely.

“However, it does not foresee a significant improvement in market conditions in the near-term.

“Despite these setbacks, we remain confident in our strategy and the sales growth potential from the qualified OEM products we are supplying and are continuing to develop.

“This should lead to a much improved trading performance over the medium-term.”

The Group will release its full interim report for the period ended 30 November, 2014, tomorrow (29th).

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