Rakon reports $6m net loss

Rakon managing director Brent Robinson. Photo supplied.

Technology company Rakon reported first half revenue of $72.2 million, up 20 per cent on the second half of last financial year, but down 9 per cent on the same period last year.

The company recorded a net loss for the six months to the end of September of $6.2m, compared to net profit of $2m a year earlier.

The outlook for the current full year was unchanged, with forecast ebitda of $4m to $8m.

A continuation of the recovery in Rakon's tradition GPS market, plus new GPS smartphone business and growth from the telecommunications segment underpinned the expected improvement, Rakon said.

The rapid rise of the New Zealand dollar against the US dollar and British pound had an impact on the first half results.

It caused a foreign exchange loss on foreign currency denominated receivables, partially offset by hedge gains from forward exchange contracts, Rakon said.

The net outcome was that Rakon incurred a foreign exchange loss of $4.2m in the first half, against a gain of $4.2m a year earlier.

Managing director Brent Robinson said that as with many companies, Rakon had endured an extremely tough period.

Despite the results for the first half of the year, Rakon had grown and enhanced its reputation and position as a leader in the supply of frequency control solutions, he said.

"Our strategies and tactics to develop new opportunities in both consumer and infrastructure markets are progressing well."

The company was confident that would begin to translate into improved financial results in the second half of the current financial year, and beyond.

Robinson said the global downturn had affected the New Zealand business, in particular.

"As demand returned in the GPS sector, competition intensified and drove sales prices down faster than expected. This, coupled with material supply constraints, had a significant negative impact on the New Zealand business," he said.

Demand for the New Zealand business, which had a significant focus on consumer GPS, had recovered quite strongly and steadily throughout the first half of the year, Rakon said.

Revenue from the first half was up 30 per cent sequentially when compared with the second half of last year, although still down 20 per cent on the same period last year.

Results from operations in Britain continued to be strong, with revenue up 17 per cent compared with the same period last year and 10 per cent sequentially when compared to the second half of the prior year.

Sales of the company's Pluto TCXOs into a broad range of applications continued to grow during the past six months.

Sales in the first half for Rakon's OCXO business out of France and India were initially lower than forecast but demand rose steadily through the first half of the year driving revenue above the same period a year earlier, and equal to the second half of the prior year.

Rakon said the successful completion of a recent $66m equity raising enabled it to proceed with its planned new facility in China.

Rakon was moving ahead with its plans to locate that in Chengdu, Robinson said.

The company had entered into arrangements with the Chengdu High Tech Zone, and it was expected that would enable it to obtain land use consent in December and start construction in early 2010.

"We have recently returned from a further visit to Chengdu to meet with our partners, officials and potential employees and are extremely pleased with progress and the opportunity in front of us," Robinson said.

Rakon shares closed at $1.17 yesterday, having ranged between $1.85 and 62c in the past year.

- NZPA