Rakon sells UK property, shifts more manufacturing to NZ

Friday 12th December 2014

Rakon, the high tech components manufacturer, has sold its Lincoln, UK plant for 900,000 British pounds, most of which will go into repaying debt, as part of a plan to send more manufacturing work back to New Zealand.

The Auckland based company completed the sale, generating net proceeds of 800,000 pounds which it will use to repay bank debt, it said in a statement. The sale was part of a plan announced earlier this year to close the UK operation and transfer all manufacturing to its New Zealand plant.

"Production previously undertaken at Lincoln has progressively moved to the company's Auckland, New Zealand site with the full transfer successfully achieved in October 2014," Rakon said. "The company expects reduced operating expenses from the closure in the second half of FY2015."

The company has been exiting the smart wireless device market, which didn't deliver big enough margins, to focus on the burgeoning telecommunications sector, and has shifted manufacturing from the UK and France to New Zealand and India as part of restructuring to reduce its global workforce by 45 percent and slash its operating costs.

Last month it affirmed its annual guidance for underlying earnings before interest, tax, depreciation and amortisation of $10 million to $15 million in the 12 months ending March 31, 2015, with higher profitability expected in the second half to come from its telecommunications unit and more revenue from its space and defence segment.

Rakon said it will report a gain on the sale of its Lincoln property of 500,000 pounds in the second half of 2015, though that's not material in terms of earnings guidance for the year.

The shares were unchanged at 33 cents, and have gained 69 percent this year.

BusinessDesk.co.nz

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