Telecom tech firm Filtronic poised to post 50% profit boost despite global chip shortage

Nord technology maker Filtronic is set to report a 50% increase in profits despite the challenges of the global semiconductor shortage.

The electronics component maker, with bases in Sedgefield, County Durham, Yeadon in Leeds and Maryland, US, said second-half trading was 13% higher than the first, which helped boost revenue by 10%, to an expected amount of £. 17.1m, down from £15.6m.

In a trading update ahead of its results, directors said a strong sales mix and tight cost control would result in Adjusted Ebitda significantly better than expected at no less than £2.7m, against £1.8 million.

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Cash in bank at 31 May was £4 million, £1 million more than the balance at 30 November last year, and net cash was £3.1 million, compared to £2.2 million. Shares rose almost 11% in early trading after the update.

The company said: “The results are particularly satisfying given the headwind of post-Covid material availability in the semiconductor supply chain. While we are not immune to disruption, to date we have been able to leverage the stronger balance sheet by securing inventory earlier, in addition to having product design under our direct control, which allows us to remain agile both in the supply of stocks and the requalification of alternative sources of supply.

“We are also delighted to end the year with some large repeat orders for delivery in fiscal year 2023, giving a stronger backlog and greater visibility than at the start of the year.”

Filtronic said it was particularly encouraged by demand for its Tower Top amplifier which it launched in 2020, with sales exceeding initial expectations.

He said its US assembly plant in Maryland gave the company a significant advantage at a time when Chinese supply chains are under pressure, but admitted that while supply chain issues in components continues, its customer’s ability to build complete P25 network solutions is limited, resulting in some backlog and forecast reschedulings.

Overall, Chairman and CEO Richard Gibbs said the company was building momentum in the business as it developed strategic markets, leading it to exceed market expectations despite challenges. of the global shortage of semiconductors.

He said the strong business performance allows Filtronic to continue to make strategic investments in the future of the business.

Mr. Gibbs said: “Throughout the year, our core markets all continued to show a strong post-Covid recovery and, despite continued disruption from electronics component shortages, we saw a further round of strong business results for the year. Revenue growth of 10% and a third consecutive year of improved Adjusted EBITDA and cash generation demonstrate the fundamental strength of the Filtronic business as we continue to make good progress in pursuing of our long-term strategic objectives.

“Delivering key semiconductor components will remain an industry-wide challenge for the foreseeable future, but we believe we have the resources to manage the disruption to our business and we are starting the new fiscal year with a strong backlog. solid order intake and optimism to deliver further growth next year.

The results for the year ended May 31 will be announced on August 2.