Filtronic Shares Tumble Despite Record Order Book as Investment Squeezes Profits

Filtronic (AIM: FTC) shares dropped at the open on Tuesday, currently down close to 11% after the RF technology group’s full-year results revealed a sharp drop in profitability, overshadowing a narrative of strategic progress and customer diversification.

For the year to 31 May 2026, revenue slipped to £55.5 million from £56.3 million a year earlier, while adjusted EBITDA slumped 34% to £11.3 million from £17.0 million. Operating profit fell 70% to £4.0 million, and pre-tax profit dropped to £3.8 million from £13.4 million a year earlier, as heavy investment in engineering, manufacturing capacity and a new Sedgefield headquarters weighed on margins.

The declines appear to have unsettled investors despite management’s upbeat tone. Filtronic highlighted its largest-ever order — a $62.5 million expansion of its GaN E-band deal with SpaceX — alongside new contracts with a European defence prime worth £13.4 million and a European space customer worth €7.0 million.

Crucially, revenue concentration from its top customer fell to 68% from 83%, evidence of broader diversification across space, defence and telecoms markets.

The group enters FY2027 with an order book covering roughly 90% of current market expectations, and reiterated confidence in meeting forecasts, with growth weighted to the second half as GaN production ramps up.

However, with cash and net cash both lower year-on-year and R&D spend running well above its historic 13% target at 17% of revenue, some investors appear cautious that near-term earnings quality is being sacrificed for longer-term scale — prompting Tuesday’s sell-off despite the strategic progress.