Another slump for Rakon

  • 19/05/2016
Another slump for Rakon

A pullback on infrastructure spending by telecommunications companies has pushed high-tech components manufacturer Rakon into the red.

The Auckland-based company posted a loss of $1.7 million in the 12 months to the end of March from a profit of $3.2M a year earlier, it said.

Underlying earnings before interest, tax, depreciation and amortisation fell to $9M, within its forecast $9M-to-$10M range, from $15.4M a year earlier. Revenue fell 14 percent to $112.7M.

Shares in Rakon dropped 9.1 percent to 25 cents and have slid 9.8 percent this year.

Rakon said earnings have been hurt as major network operators around the world favoured investment in 5G bandwidth and merger and acquisition activities over spending on base stations and other infrastructure.

That's seen revenue from telecommunications, the company's largest unit, slump by a quarter to $53.4M, outweighing gains in sales of its global positioning and space and defence units.

The move to 5G would create a need for increased infrastructure investment to cope with growing demand for an ever-expanding range of applications and faster network speeds, said managing director Brent Robinson.

Rakon has strong relationships with both network equipment and original design manufacturers, meaning it was well-placed to benefit from an upturn in infrastructure investment, but remained cautious about forecasting exactly when demand would rebound, he said.

The company's global positioning unit boosted revenue 3.7 percent to $31.5M.

Mr Robinson said the increasing usage of GPS technology in a range of industries was generating significant opportunities for Rakon.

A breakdown of revenue by region shows the biggest decline came from Asian customers, with sales dropping by a quarter to $48.7M. Sales to North American customers increased 35 percent to $23.9M while European revenue slid 18 percent to $37.2M.