County Durham manufacturer Filtronic has seen its turnover fall by more than 25% after an investment in the US telecoms market failed to reap the expected awards.
Revenue at the firm, which makes antennas and filters for the telecoms market, saw its turnover fall from £21.6m to £15.9m for the year ending May 31.
The drop in turnover was blamed on consolidation in the US mobile network operator market, which led to fewer sales.
The company has been investing heavily in developing mMiMO antennas - used within the 5G internet network - but the changes in the US ultimately led to sales of these products not hitting expectations. As a result, Filtronic has decided to divest its telecoms and antenna division.
Rob Smith, Filtronic’s CEO, said: “The year was a difficult year. The big event of the year was we had won a project to develop Antenna for a leading OEM (original equipment manufacturer) customer. Off the back of that there were forecasts that would have been transformative for the business. We invested a lot of engineering resource into those antennas only to be told in December that the forecast wasn’t what we were told and was very low.
“Our whole plan and investment was undone.
“We immediately went into a process of reviewing what our strategy would be. We concluded that disposing of the antenna business was the right thing to do.”
Filtronic said the sale will allow it to clarify its business strategy and Mr Smith hinted that talks with a possible buyer were ongoing, though he declined to give any further details.
Filtronic’s profits were also dented by after it agreed to pay out £1.6m relating to faulty antennas that were distributed to one of its clients. The products, made between 2006 and 2007 were still under warranty, resulting in the claim.
Operating profit came in at £234,000 for the year, down from £3.2m in 2018.
Going forward, Filtronic will focus on servicing 5G backhaul, public safety, and defence and aerospace.
On a positive note Filtronic has secured an order book worth £10m for its 5G backhaul products. Much of the products are manufactured at the company’s facility in Sedgefield, which Mr Smith said is growing as the firm looks to recruit more staff.
He said: “From a local point of view, most of the struggles we had in 2019 were not affecting the site in Sedgefield. Sedgefield was performing quite well and we have been recruiting last year and into this year.
“The inflow of £10m of orders was through the Sedgefield site. Over the last 12 months we have moved to continental shifts and we are running 24/7. We are recruiting for more employees, we are recruiting for production people and we are also recruiting for engineering people.”
