Rakon revenue up 31%, bullish outlook

Wednesday 18th May 2011

Rakon lifted revenue 31% to $189.3 million in the year to March and is bullish about its prospects as new technology increases demand for its products.

Managing director Brent Robinson said Rakon -- which makes a broad range of frequency control products -- had capitalised on massive growth in the use of smart wireless devices and data usage across telecommunications networks.

It had increased market share, not only into the companies that designed and manufactured consumer devices, but also into the manufacturers of telecommunications infrastructure, Robinson said.

The latest results continued an improvement that started in the second half of the previous financial year, when the company began its rebound from the impacts of the global economic crisis.

In the year to the end of March, Rakon reported a net profit of $8.5m, compared to a loss of $5.4m the previous financial year.

No dividend will be paid, in line with the company's policy that no dividend payments will be made for the foreseeable future, with surplus funds to be used for growth opportunities.

In the past year revenue from telecommunications markets grew more than 50% to $72m, equating to 38% of Rakon's total revenues, while revenue from smart wireless devices more than tripled to $27m.

The company had expanded capacity at all its facilities to meet current and future demand, while its facility in Chengdu, China, was close to beginning trial production, and was on track for official opening in July.

Capital spending was $47.7m last year, of which $31m was on the Chengdu facility. Clean room and crystal capacity in this country had been increased to expand production and to enable Rakon to development new technologies.

Robinson said the outlook for the company's products in smart wireless devices and for telecommunications infrastructure was extremely strong.

Rakon had established itself as a major supplier to all infrastructure suppliers, and in some cases had a preferred supplier position, where engineers used the Rakon products by default.

"We're going into the new year very well positioned in all our target markets. There's certainly a lot of growth in data and connectivity, and Rakon is very well positioned in all of that, and we look forward to this growth period," Robinson said.

"Our sales volumes for the first six weeks of the new year are well up on the same period in the prior year which gives us confidence that FY12 will build further on the successes of last year."

Rakon shares were down 7c in mid-afternoon trading to $1.17.

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