FILTRONIC has guaranteed the future of its County Durham operations despite shifting more of its production to China.

The company described the Newton Aycliffe manufacturing plant as the catalyst that feeds all the other business.

Chairman Professor David Rhodes told The Northern Echo: "That (the Newton Aycliffe plant) will always be there, independent of all other considerations."

Filtronic has increasingly looked to the Far East for lower cost bases in an effort to remain competitive. The company, which makes mobile phone equipment, has increased its Chinese operations six-fold, making it a larger manufacturing base than the UK for the first time.

Despite this, the company performed poorly during the past financial year.

Its full-year results showed sales were down £4.1m at £237.2m and operating profits fell to £3.7m from £6.7m due to currency fluctuations.

The company, based in Shipley, West Yorkshire, made pre-tax losses of £400,000 in the year to May 31 against profits of £3.8m previously.

The London Stock Exchange reacted to the figures with dismay. Shares plummeted nine per cent, or 15p, to 160p.

Filtronic blamed the weak dollar for reduced sales and operating profits in its core wireless infrastructure business, which makes equipment that helps mobile phone masts transmit calls.

The company, which also makes mobile phone antennae, also said it had breached some financial covenants related to a £50m loan.

But it said that its banks had waived the covenant breaches and had confirmed their continuing support.

Net interest and financing costs were £8.6m for the year, up from £2.9m last year.

Filtronic said this was mainly due to early loan repayments giving the company sizeable savings on debt interest payments.

It said its UK sites would focus on new product launches for wireless infrastructure and power amplifiers for third generation mobile base stations, which it said presented a major market opportunity.

Filtronic made a profit of £4.5m on the sale of defence business REW Group, in California.

Professor Rhodes said: "Filtronic is well placed for growth in the 2004/2005 financial year."

As well as Newton Aycliffe and Shipley, the group has manufacturing sites in East Kilbride and Stewarton in Scotland, Wolverhampton and Milton Keynes. It also has bases in the US, Finland, China and Australia.