01/02/2005
Filtronic once again released decent results at the interim stage to November. Focusing on the mobile arena, where it supplies transmit-receive modules for mobile base stations and is a leading manufacturer of mobile handset antennas, with 18% of the global market, sales improved £6.5m to £130.1m and profits at the pre-tax line lifted a healthy £600,000 to £3.3m. To alleviate the problems it faced from the depreciation of the US dollar, production has been ramped up in China to act as a natural hedge against rises in sterling. The strengthening of the 3G market should produce strong growth in its wireless infrastructure business and, in anticipation, Filtronic increased its capital expenditure by £1m to £3m. It also attracted a couple of new OEM contracts. While healthy revenues are expected, Filtronic's issue has always been its balance sheet. Poorer trading in last year's second half plus the weakness of the US dollar caused it to breach certain covenants attached to its 10% senior notes that were refinanced with a £50m term loan. The banks have waived this so far but additional finance charges of £500,000 will be added to the £2m in net interest it already pays. Disposals provided £7.3m, helping to reduce gearing from 51% to 43%. It was expected that the handset products division would be spun out to prevent a cash crunch but this has now been delayed. Broker Dresdner Kleinwort Wasserstein rates the stock a strong buy, predicting net profit of £3.7m, but even with a reasonable prospective p/e of 29.4, invest only if you have an appetite for risk.
| Market cap: | £173.2m |
| PE Forecast: | 29.4 |
| Share price: | 232p |
| LSE | £17.09m |
23.00p
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-1.75p
|
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| Other company articles: |
| 30/05/2008 |
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