Companies: FTC   

The designer and producer of electronic subsystems and components for wireless applications saw pre-tax profits jump more than fivefold from £900,000 to £5.5m in the year to May. This happened as the group restructured its balance sheet and saw sales in its principal wireless applications division surge 16% to £168.4m. The integrated products arm also experienced fast growth, with revenues up13.5% to £43.6m. However, this business is still loss making, notching up a £9.9m deficit at an operating level. The group’s other subsidiary, focused on handset products, saw sales decline 17% to £50m, reducing operating profits by two thirds to £3.6m. Filtronic is in exclusive negotiations about the sale of this business, but says revenues have picked up since the year-end. The proceeds of the sale will reduce the group’s £43m net debt position and also help fund the ongoing growth of the business. Filtronic has shut its Australian plant and is opening a facility in Hungary. The defence work is done in the UK factory, which is now working at full pelt, but much of the other manufacture is conducted in China. A lot of the growth is coming from developing countries setting up wireless networks, as well as the launch of 2G and 3G transmitters on existing base stations. House broker Cazenove has lifted its forecast for 2006, expecting profits to triple to £16m, giving earnings per share of 15p. That gives a p/e of 15.5. Buy on continued growth in demand in this sector.

Filtronic	LSE	£17.09m	23.00p	-1.75p
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