Rakon forecasts improved operating earnings

Thursday 20th December 2018

High-tech components maker Rakon is forecasting an improvement of up to 16 percent in its full-year operating earnings.

Underlying earnings before interest, tax, depreciation and amortisation of $12-to-$14 million are expected for the year to March 31. That compares with the $12.1 million reported a year earlier and $5.9 million for the six months ended Sept. 30.

“The second-half performance continues on track with strong demand in the telecommunications market segment for network equipment and infrastructure requirements to support the roll-out of 4.5G/5G,” chief executive Brent Robinson said in a statement to the NZX. “In the defence market, US demand is expected to drive further growth.”

Rakon shares were recently down a cent at 29 cents. They have gained 26 percent this year.

Rakon's three core markets are telecommunications, global positioning, and space and defence. The company has five manufacturing plants and six research and development centres and in May completed the acquisition of its Centum Rakon India joint venture.

The $5.9 million of first-half operating earnings the firm reported last month was a 55 percent increase from the year before.

Rakon said then that component supply and capacity in the telecommunications sector was tight and that the firm’s challenge was to manage that risk and capture its share of the demand growth.

Last week the firm said it increased its working capital facility with ASB Bank by $6 million to $15.5 million to help meet that extra demand from 4/4.5G and 5G installations.

Today Robinson said a key focus for the company through to March is expanding capacity at Rakon India to meet that customer demand.

(BusinessDesk)

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