North tech manufacturer Filtronic is poised to report a 50% boost in profits despite the challenges of the global semiconductor shortage.
The electronic component manufacturer, with bases in Sedgefield, County Durham, Yeadon in Leeds and Maryland, US, says trading in the second half of the year was 13% higher than the first, helping to drive up revenue 10%, to an expected £17.1m, up from £15.6m.
In a trading update ahead of its results, directors said a strong sales mix and tight cost controls will result in adjusted Ebitda being materially ahead of forecasts, at no less than £2.7m, up from £1.8m.
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Cash at bank on May 31 was £4m, £1m up from the balance at November 30 last year, and net cash was £3.1m, up from £2.2m. Shares rose almost 11% in early trading following the update.
The firm said: “The results are particularly pleasing given the headwind from post-Covid material availability in the semiconductor supply chain. Whilst we are not immune from the disruption, to date, we have been able to leverage the stronger balance sheet by securing inventory early, in addition to having product design under our direct control which keeps us agile in both sourcing inventory and requalifying alternative sources of supply.
“We are also pleased to close the year with some significant repeat orders for delivery in FY2023 giving a stronger order book and greater visibility than when we entered the year.”
Filtronic said it is particularly encouraged by demand for its Tower Top Amplifier which it launched in 2020, with sales exceeding initial expectations.
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It said its US assembly facility in Maryland is giving the firm a significant advantage at a time when Chinese supply chains are under pressure, but admitted that as electronic component supply chain issues continue, its customer’s ability to build complete P25 network solutions is constrained, resulting in some rescheduling of orderbook and forecasts.
Overall, chief executive officer Richard Gibbs said the company is building momentum in the business as it develops strategic markets, leading it to exceed market expectations despite the challenges of the global semiconductor shortage.
He said the strong trading performance is enabling Filtronic to continue to make strategic investments in the future of the business.
Mr Gibbs said: “Throughout the year our primary markets have all continued to show a robust post-Covid recovery and, notwithstanding ongoing disruptions caused by shortages of electronic components, we have delivered another strong set of trading results for the financial year. Top line growth of 10% and a third consecutive year of improved adjusted EBITDA and cash generation demonstrates the core strength of the Filtronic business as we continue to make good progress in pursuit of our long-term strategic goals.
“The delivery of 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 start the new financial year with a strong order book and optimism to deliver further growth next year”.
Results for the financial year ended May 31 will be announced on August 2.