CML Microsystems Plc, a company specializing in the development of mixed-signal, RF, and microwave semiconductors for global communications markets, has issued a trading update for the year ended 31 March 2024 ("FY24"). The company reported solid growth in the first half of the year, despite a general decline in the semiconductor market. However, caution was expressed for the second half due to elevated inventory levels across some customers and a weaker-than-anticipated China market.

The second half of the year justified the caution, with some customers and channel partners continuing to reduce their inventory levels, leading to lower shipments from the core CML business. On a positive note, the revenue contribution from the acquisition of Microwave Technology, Inc. (MwT) exceeded management expectations, compensating for the inventory situation. As a result, full-year revenue expectations are close to £23m, representing an 11% increase from the prior 12-month period.

However, the change in revenue mix between higher margin core products and lower margin MwT products has impacted the overall Group margin, resulting in profitability below prior expectations. The pre-tax profit is now predicted to be just under £3m, with EBITDA predicted to be in the region of £6.4m, marginally below expectations.

The integration of the MwT business into the Group is progressing well, with the relevant MwT products incorporated under the CML SμRF brand from January 2024. The company retains a strong balance sheet, with net cash reserves of just under £18m. CML will publish its full-year results for FY24 on 2 July 2024.

Despite the challenges, CML remains a key partner to its customer base and is focused on capturing share of the significant growth opportunities ahead. The company has strategically re-positioned itself as a global semiconductor company solely focused on application areas within worldwide wireless communications markets.