Rakon posts first-half loss on forex impact, maintains guidance for full year

Thursday 12th November 2009

Rakon Ltd's first-half was "an extremely tough period" as expected, with the New Zealand-based manufacturer of crystal oscillators used in navigation systems and mobile phones reporting a slightly better trading performance than the company estimated two months ago.

The net loss was $6.2 million in the six months ended Sept. 30, from a profit of $2 million a year earlier, the Auckland-based company said in a statement. The results reflected a $4.2 million foreign exchange loss in the first half and a 9% decline in revenue. Rakon’s $2.9 million loss before interest, tax, depreciation and amortisation was slightly better than the company's September forecast of $3 million to $4 million. The company kept its full year EBITDA forecast range of $4 million to $8 million.

Rakon shares traded rose 1.7% to $1.09 on the NZX and have declined 6.3% so far this year. Its U.K. operations were the highlight for the first half, producing ebitda of $3.4 million on revenue of $18.6 million, a result pulled down by $1.5 million of foreign exchange losses. The UK operation produced a $5.3 million ebidta on sales of $15.9 million in the same period last year.

New Zealand sales were $40.1 million, resulting in a $3.6 million ebitda loss, mainly reflecting $4 million of foreign exchange losses.

Rakon's managing director, Brent Robinson, described a half year that has closely tracked the global recession.

"Demand for the New Zealand business, which has a significant focus on consumer GPS, has recovered quite strongly and steadily through the first half of the year. Revenue from the first half was up 30% sequentially when compared with the second half of last year. Although still down 20% on the same period last year, it is a good sign momentum is building."

However, competitors' pricing had been aggressive as demand returned to the sector. Couple with material supply constraints, this had a "significant impact on the New Zealand business", Robinson said.

"Sales in the first half for Rakon's OXCO (crystal oscillators) business out of France and India were initially lower than forecast but demand increased steadily throughout the first half of the year, driving revenue above the same period in the prior year and equal to the second half of the prior year."

The segmental reports show sales attributed to the French operation totalled $12.3 million for the half, compared with $8.2 million for the same period last year, and produced an ebitda loss of $3.3 million.

Robinson also updated on the company's plans to build new manufacturing facilities in Chengdu, China. Land use consents are expected to be granted next month in the Chengdu High Tech Zone, with construction scheduled to begin early next year.

Businesswire.co.nz

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