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11 December 2007


Filtronic returns to short-term profit

In a trading update for the 6 months to end-November 2007, wireless electronics company Filtronic plc of Shipley, UK said it now expects to have returned to profitability (compared to its previous forecast of a small loss) and to have been operationally cash neutral. Previously, in July, Filtronic reported that losses had risen to £29m for the year ending 31 May (up from £5.1m the prior year).

For the 6 months to end-November 2007, the Filtronic Compound Semiconductors Ltd GaAs foundry division in Newton Aycliffe, County Durham benefited from a previously announced additional short-term increase in volume for pHEMT switches. Meanwhile, the firm’s Point-to-Point business delivered a substantial, better-than-expected increase in revenue, driven by stronger demand as well as increased competitiveness of newly developed RF products. Defense business remained steady.

In October, the disposal of the US Defense business was completed, for an initial payment of $3.4m, plus a further deferred payment of up to $1.5m due in first-quarter 2009. November’s sale of its property in Saltaire generated proceeds of £5.9m. The firm’s cash balance rose from £110.3m at the end of August to £117m at the end of November.

The interim first-half results will be formally announced on 21 January.

*At the end of November, Filtronic agreed to sell Filtronic Compound Semiconductors Ltd to an unnamed firm for no initial payment (although there is potential for deferred payment if certain performance targets are met). The sale of the fab is not expected to close before February.

Now, according to a report in regional newspaper The Northern Echo, a spokesman representing Filtronic says that all jobs will be transferred to the new owner and Filtronic will continue as a business. “It is being sold, but it is very much an ongoing concern.”

Previously, early this year a plan for a £45m fab upgrade was scrapped due to volatility in the cell-phone market, and 31 jobs were lost in May. Then, in late June, Filtronic Compound Semiconductors’ biggest customer, RF Micro Devices Of Greensboro, NC, USA, announced the termination of an outsourcing deal from September. Subsequently, Filtronic decided to cut staffing at the fab by 115, from 319 to about 200, and entered a consulation process with staff.

In September, due to a number of short-term orders for GaAs pHEMT switch wafers that created work through to March 2008, the firm postponed the proposed redundancies. Nevertheless, a ccording to the Filtronic spokesman, the consulation process was re-started earlier this month, as expected. Filtronic is currently in discussion with customers on the level of future business beyond March and expect to make future plans accordingly, he added.

See related items:

Filtronic negotiating sale of compound semiconductors division

Filtronic forecasts return to profit this year, pending sale of Compound Semiconductors division

Filtronic to cut 115 jobs as RFMD decides to cease buying GaAs pHEMT switches in September

Filtronic confirms cut in compound semi capex due to lower-than-expected demand

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