Filtronic has agreed to pay out £1.6m to one of its customers after it delivered faulty antennas two years ago.
The Sedgefield manufacturer has entered into a settlement agreements with its customer, which filed a warranty claim after receiving antennas during the 2016/17 financial year.
Performance issue were found to be affecting the antenna while they were still under warranty. The problem was found to be a component fault that arose on certain antennas when placed in certain operating and environmental conditions.
Filtronic has now agreed to pay its customer $2m (£1.6m) in compensation over the issue and has agreed to upgrade its customer’s stock of antenna units.
Rob Smith, Filtronic’s CEO, said: “The board is pleased with the outcome of the settlement agreement reached with our long-standing customer. We greatly appreciate the constructive approach taken by our customer to mitigate the cost of the warranty claim and for the helpful payment plan that reduces the cash impact on the business as we ramp output of our 5G Backhaul Transceivers.
“The customer remains a loyal client of the company and has been continuing to place material orders with Filtronic whilst the warranty discussions have been ongoing.”
Filtronic will make the payments in four instalments between now and December 31, 2020.
The company has already upgraded and fixed all of the affected antennas, which it adds were only those sold in 2016/17. There are no other warranty claims being levied against the company.
Filtronic revealed it had settled the warranty claim in a statement made to its investors, in which it also confirmed it would announced its results for the 2018/19 financial year next week.
Sales from continued operations are expected to come in at £15.9m.
The manufacturer added that orders for its 5G Backhaul transceivers have been strong as the market continues to develop and roll out the UK’s 5G network. In total Filtronic has received orders worth more than £10m for these transceivers, with the majority of them being shipped during the current financial year.
To meet the increased demand for the products the company is increasing capacity at its Sedgefield base.
At the time of writing Filtronic’s shares had increased in value from 7.75p per share at close of play on Thursday to 8.1p.
