LONDON (SHARECAST) - Mobile antenna maker Sarantel is to outsource manufacturing to Estonia as it seeks to cut back on costs.
It has signed a letter of intent with the electronics group Elcoteq to outsource its assembly, test and supply chain processes.
Sarantel, which makes antennas used in the SkyCaddie, a device used to show golfers how far away the hole is, and in military applications, said the move is expected to generate savings of about £500,000 a year. Exceptional costs should total about £50,000, it said.
Chief executive David Wither explained to ShareCast that while the company will continue to operate its factory in Wellingborough, it decided to outsource manufacturing rather than expanding output at its current facility.
The announcement comes on the same day Sarantel revealed that pre-tax losses widened to £1.5m in the six months to March 31, from £1.3m over the same period the previous year. Revenues slipped to £1.4m from £1.7m.
Sarantel said that high-value revenues were lower than the previous year due to a boost in orders from satellite phone group Iridium the previous year as it launched a new handset. Revenues from high-value military and satellite data applications continue to increase though, it said.
The company also said that changes in the mobile phone sector were ‘encouraging’ for the company, with more devices incorporating location-based devices.
‘The board remains optimistic that market and consumer forces will drive demand for the improved performance that Sarantel's antennas deliver both in the GPS market and in the more near term, the military market,’ the company said.
‘As previously announced, the board expects growth to continue in 2010 with Group revenues for the full year expected to be approximately £3.1m to £3.3m.’
Sarantel also announced that finance director Sitkow Yeung is to leave the company to take up a similar position at a larger company.