Strong shekel blunts MTI

28/07/2008 Robert Tyerman

Interim profits have fallen 64 per cent at MTI Wireless Edge, maker of flat-panel antennae for fixed wireless broadband.

Israel-based MTI says pre-tax profits fell from £1.2 million to £447,000 in the six months to June on revenues 8.3 per cent lower at £4.45 million. Chief executive officer Dov Feiner says the company, which derives 63 per cent of its revenues from outside Israel, has suffered from a 22 per cent appreciation of the Israeli shekel against the US dollar, but hopes to offset this by outsourcing some of production from a new facility in India, where labour costs 90 per cent less than in Israel.

AIM-quoted MTI, which claims a hefty 25 per cent share of the world fixed broadband antennae market and boasts a £3.5 million order backlog, also had problems during the period when an important corporate customer switched some of its business elsewhere. However, Feiner says these problems have been ironed out and the unnamed customer has returned.

MTI sees best long-term growth coming from RFID (radio frequency identification) and expects to increase RFID’s share of overall turnover to many times the present five per cent. The company is now looking for acquisitions of companies, probably in the USA, in the £3.5 million to £4 million turnover band and can afford to pay up to £10 million cash, says finance director Moni Borovitz, whose family controls Tel Aviv-quoted MTI Computers, which holds 49 per cent of MTI Wireless Edge.

Floated in 2006 at 39p, MTI shares reached 56.25p the following year, but have now fallen to 17p, valuing the company at £8.9 million. They are a recovery speculation.

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