Redundancies and new chief executive at County Durham manufacturer Filtronic

Firm with County Durham base has replaced its chief executive after announcing expected drop in sales

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

County Durham components manufacturer Filtronic has announced redundancies and parted company with its chief executive after announcing an expected 56% drop in revenues from its wireless division.

The firm, which designs and manufactures microwave electronics products for the wireless telecoms infrastructure market, said in a trading update that revenues from its wireless business will not “build up as quickly as expected”.

As a result, the board now expects revenues for its wireless business to be around £10m for the year ending May 31 2015.

The figure marks a steep drop on the year ended May 2014 sales revenue in the wireless business of £23.2m, which in itself represented a 37.5% drop on the previous year’s £31.9m.

Board changes have also been made and Rob Smith, chief financial officer, has replaced Alan Needle as chief executive officer with immediate effect.

The firm employs around 186 people, 85 of whom work at its NETPark base in Sedgefield, County Durham, which forms its broadband division.

Headquartered in Leeds, the firm also has offices in Sweden, China and two in the US, but it is not yet known where job losses will be made.

While the wireless business has suffered, the London Stock Exchange announcement said the broadband division continues to trade in line with market expectations.

The trading update follows on from Filtronic reporting in January a half-year operating loss before amortisation and exceptional items of £4.1m, down from a £1.7m profit in the first half of the 2013/14 financial year.

At the time, however, then chief financial officer Rob Smith said the downturn had been expected in the midst of a “transition year”, and the completion of a major project since then had seen the business return to a “baseline” level.

However, yesterday’s market note said: “The announcement made on 28 January 28 2015 cautioned that the Wireless business was exposed to the timing of several new OEM product introductions over the next few months.

“Following recent meetings with customers and a detailed and critical appraisal of the status of key engineering developments, it is now clear to the board that the revenues from wireless in the latter months of the second half will not build up as quickly as expected.

“In particular, it is unlikely that any of the antenna projects in development will produce significant revenue before the May 31 year end.

“The board has set in train a series of cost-saving measures involving redundancies both in the UK and overseas. This will have a modest positive impact on profitability and cash flow in the remaining three months of the financial year.

“The main benefit of these actions will not be felt, however, until the start of the forthcoming financial year.”

As of February 28, net cash amounted to £1m.

Bank facilities, based on invoice discounting, are in place and the board said it is investigating a number of measures to strengthen the balance sheet with permanent capital.

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