Shares in Calnex Solutions closed 3 per cent lower yesterday after the telecoms testing specialist said it was optimistic about meeting expectations in the coming year despite fluctuating revenues.
In a trading update ahead of its annual general meeting held yesterday, the Linlithgow-based firm said positive trends within the telecoms sector meant the board was “confident”
in its ability to deliver despite global supply chain disruptions. As has been the case since these issues began to emerge more than a year ago, Calnex said it is continuing to successfully mitigate the impact of the global semiconductor shortage on its ability to manufacture and ship its products which are provided to telecoms providers around the world.
However, the company added:“As with the prior year, this may cause monthly revenue to fluctuate, and the board expects there will be [a second half] weighting to the group’s trading performance.”
READ MORE: Calnex snaps up fellow testing specialist to further boost profits
Following that cautionary note, shares in AIM-quoted Calnex closed yesterday’s trading down 5p at 156p.
Despite these concerns, Calnex said it made “solid progress” in the first few months of the new financial year. It predicted that annual performance will be in line with market expectations, with house broker Cenkos Securities currently pencilling in an increase in revenues and profits to £20.2m and £5.6m respectively.
“The expansion into adjacent markets, including data centres, represents an exciting new opportunity for Calnex,” the company said. “The group continues to build relationships in these verticals.”
In April Calnex announced it will pay up to £3.5 million for iTrinergy, a developer of software-defined test networks technology. Based in Stevenage, Hertfordshire, iTrinergy’s NE-ONE hardware and software is used to create real-world network test environments to verify the performance of applications before they go live.
READ MORE: Calnex weathers semiconductor storms to generate record profits
Speaking at the time, Calnex founder and chief executive Tommy Cook said he was “delighted” with the deal which will broaden the company’s accessible markets.
“With both businesses developing high-quality, complex, technical testing solutions, trusted by some of the world’s most demanding organisations, we are particularly excited by the strategic fit of the two organisations,” he added. Calnex said yesterday that integration of operations is progressing as planned.
The company’s core business – supplying equipment to component manufacturers, equipment vendors and network operators – continues to be bolstered by the roll-out of 5G mobile networks and the growth in cloud computing. This includes sales of Calnex’s Paragon-Neo platform, which operates on the O-RAN (Open Radio Access Network) standards designed to promote competition and encourage new entrants into the telecoms industry’s hardware and software markets.
Calnex is also working to grow its presence in the market to supply “hyperscale” clients such as Meta Platforms, Amazon and Alphabet who can use the Scottish firm’s equipment to maintain their datacentre networks.
This drove a double-digit increase in revenues during the year to the end of March, which rose by 23% to £22m despite semiconductor shortages that have led to an increasing number of dodgy components making their way into the market. Calnex has been working with its long-time supplier Kelvinside Electronics of Kilsyth to deal with these issues.
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