London, UK Filtronic says that based on present exchange rates, the translation of its overseas operations in to sterling at the end of its financial year on 31 May is likely to impact operating profit for the full year by £2.6m, of which £0.7m is due to retranslation of the first half results.
An additional effect of the strength of sterling is to place our competition, which is principally US based corporations, potentially at a competitive advantage on price. However, according to Professor J David Rhodes, the company's executive chairman, it is maintaining our market share.
However the company continues to make progress and Rhodes said its has signed a significant new frame agreement with a new major original equipment manufacturer customer for the design, manufacture and supply of radio frequency transmit/receive modules for cellular basestations. “Initial production volumes will be for GSM 1900 MHz applications and in a full year are scheduled to increase the total units currently supplied by Filtronic's Wireless Infrastructure division by more than 20%. Initial supplies will be made in the last quarter of 2004 calendar year following the normal qualification processes.”
In order to be able to satisfy its customers' demands for production capacity, Rhodes said, “We have not only maintained levels of our design and manufacturing capacity in our Wireless Infrastructure facilities in the UK, USA, Finland and Australia but we have been rapidly increasing our now substantial manufacturing capacity in China. In doing this, there have been additional costs in this business which in the short term have had the effect of reducing margins.
“Our work on the new power amplifier products for cellular basestations continues to progress favourably with the first production units scheduled to be supplied in the autumn.”