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Rakon reins in full-year loss on pick-up in demand for GPS, outlook improves

Friday 21st May 2010

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Rakon Limited, which manufactures crystal oscillators used in navigation systems and mobile phones, reined in its 2010 loss as a pick-up in demand for global positioning systems (GPS) increased in the second half of the year.  

The Auckland-based company posted a net loss of $5.4 million, or 3.3 cents per share, in the 12 months ended March 31, compared to a $4.5 million profit, or 3.6 cents, a year earlier.  

Rakon put it down to an improvement in consumer demand for GPS devices in the second half of the year, over which time it made a net profit of $800,000.  

Full-year revenue rose 4% to $144.5 million, and earnings before interest, taxation, depreciation and amortisation (EBITDA) tumbled 77% to $4.3 million, the bottom end of its forecast range.

The company expects EBITDA of between $25 million and $30 million for the 2011 financial year.  

“Our results in the second half of the year were much stronger as demand grew strongly across our entire business, which helped deliver a $7 million improvement in net result after tax,” said managing director Brent Robinson in a statement.

“Our strategy of expanding firstly into Europe and then into  India and China, plus our investment in new technologies, puts us in a strong position to build strong bottom line growth now and in future.” 

Last year the components manufacturer tapped investors for $86 million to expand its Chinese operations to boost the volume of production while cutting the cost of doing so.

It expects the production line to begin half-way through 2011, ramping up to high volume in 2012. Rakon has $46 million in its cash reserves which is plans to help fund its Chinese expansion over the next 18 months.  

The shares sank 4% to 96 cents in trading on the NZX today, and have slumped 15% this year.  Rakon kept its policy of no dividend payments to shareholders, with surplus funds retained “in order to capitalise on immediate and future growth opportunities.”

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