Rakon loses $6.16 million

Global downturn main factor, MD says

Hi-tech components maker Rakon has slumped to a $6.16 million loss in the six months to September. The result, which is slightly better than the company's recent guidance to the market indicated, compares with a profit of $1.98 million for the same period a year ago. Rakon makes quartz and crystal products used in global positioning system (GPS) technology. Its products end up in many electronic devices including mobile phones. Managing director Brent Robinson said the global downturn had affected the company's 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. Mr Robinson said results from the British operations continued to be strong, "As we noted at our recent capital raising our UK operations continue to perform very well. Revenue is up 17 percent compared with the same period last year and 10 percent sequentially when compared to the second half of the prior year." The company recently raised about $65 million of new capital, about half of which is being used to start work on a new manufacturing plant in Chengdu, in southwest China. For the six months to September revenue was $72.21 million, down from $79.37 million at the same time last year. Rakon is forecast operating (ebitda) earnings of between $4 million and $8 million for the full year. The company intends to update the market on how it is progressing against that target early in the 2010 calendar year. "As in any downturn the effort across the business to establish a strong position for the future actually intensifies," Robinson said. "Our strategies and tactics to develop new opportunities in both consumer and infrastructure markets are progressing well. We are confident this will begin to translate into improved financial results in the second half of the 2010 financial year and beyond."

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