Rakon lifts revenue 78%

High $Kiwi impacts on bottom line, brings forecast warning

GPS crystal manufacturer Rakon has boosted revenue by 78% year on year for the six months ended 30 September 2007, but currency volatility has damaged overall performance.

Revenue for the period was $89.9 million while earnings before interest tax and depreciation grew 22% to $12.4 million.

Net profit after tax, however, was up only 5% to $5.7 million.

The result includes global business acquired at the end of the previous financial year and the impacts of the globally weakening US dollar, a statement to the stock exchange this morning notes.

"In particular the high NZ$ to US$ has had an adverse effect," it says.

"New Zealand revenue grew 32% on a US$ basis over the same period last year, but when converted to NZ$ this growth was reduced to 12%. Revenue and EBITDA would be NZ$7.7 million and NZ$4.6 million higher than reported if the NZ$/US$ cross rate had remained the same as it was for the same period last year," the statement says.

"Similarly, revenue & EBITDA would be NZ$5 million and NZ$ 2 million higher, if the NZ$/US$ cross rate had been in line with the rates assumed by us in determining the projected ranges communicated to the market in May 2007."

Also damaging the bottom line were higher direct costs due to Rakon's global expansion and investment.

The company's UK investment performed in line with expectations, however its French business has been unable to keep up with demand.

The company says forecasting the full year has is difficult because of the "dramatic weakening" of the US dollar and the volatility of the New Zealand/US cross rate. It warn conditions may make it difficult to achieve the EBITDA range forecast of NZ$27 million to $32 million.

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