LONDON (ShareCast) - (Sharecast News) - Shares in Filtronic tanked on Wednesday as the AIM-listed designer and manufacturer of antennas said it expects to make a loss for the current year as one of its customers will be purchasing fewer antennas than originally planned.
The company said that while sales in the first half of the year slipped to £10.4m from £12.8m in the same period a year ago, it has traded ahead of its internal sales projections. However, demand for its recently introduced massive MIMO antennas (mMIMO) is now expected to be "substantially" lower than it had forecast in the second half of FY2019 and it expects to make a loss for the current financial year, versus a consensus forecast of £2m profit.

The group's predominant original equipment manufacturer customer has now significantly cut its forecast demand, having been advised that its lead client is looking to deploy different frequencies to those it had originally indicated.

"As a result of this lower demand and the uncertainty it brings, the board has decided to impair fully the net book value of the capitalised development costs of £0.5m relating to the development of mMIMO in its half year results.

"The company has made considerable efforts to diversify its customer base in recent years and despite this obvious set back to our mMIMO antennas business, we are pleased to advise that we were recently approved as a supplier of a niche antenna product to a Tier 1 Mobile Network Operator in South Africa.

"However, given the importance of mMIMO to our future plans in the antenna business, the board has commenced a review of its options for this component of the group."

Notwithstanding the antenna business setback, the group said it was pleased with the continuing progress made in developing its critical communications market opportunities, with this part of the business trading in line with expectations.

At 1040 GMT, the shares were down 55% to 8.15p.

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