Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More

Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Sluggish first half pushes Rakon to $3.96M loss

Sluggish first half pushes Rakon to $3.96M loss

Nov. 15 (BusinessDesk) - Smartphone equipment maker Rakon saw its loss for the six months to Sept. 30 widen to $3.96 million, as revenues fell and operating expenses rose during a period of sluggish growth in major markets.

The result is a blow-out from the $259,000 loss reported for the same six months last year, with revenues of $89.4 million down $5 million on the same period a year earlier, albeit a $6 million improvement on sales in the second half of the last financial year, the company said in a statement to the NZX.

Rakon shares fell 4.4 percent to 43 cents at the open of trading on the NZX. Over the last year, the shares have fallen 34.9 percent.

Rakon announced plans on Nov. 6 to move manufacturing from New Zealand to China and other moves that will strip $10 million a year of costs out of the business. It will concentrate manufacturing in its Chinese and Indian joint venture plants, while continuing research and development in New Zealand.

On an earnings before interest, tax, depreciation and amortisation basis, Rakon reported a surplus of $4.913 million, compared with $6.139 million for the same period last year.

The company operated with negative cash flow from operations of $2.2 million for the six months under view, compared with a $1.4 million cash flow shortfall in the comparable previous period.

Investment activity was lower in the six months, adding $7.1 million in negative cash flows, compared with $26.3 million in the first half of the previous year.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

Non-cash depreciation rose significantly to $5.6 million, compared with $3.5 million in the same period last year.

The results reflected softer demand for telecommunications equipment than anticipated, combined with additional costs the company is carrying as it invests in its manufacturing capacity to meet anticipated growth, said managing director Brent Robinson.

"The economic situation in Europe and North America has impacted the telecommunications market for longer than had been expected," he said, although recent major announcements of plans to build new, so-called 4G networks heralded an expected increase in demand.

Rakon makes crystal-based parts for both smartphones and for mobile telecommunications networks.

"We are in a very strong position as a preferred supplier to the leading vendors of equipment," said Robinson, who left earnings guidance for the full year unchanged.

Notes to the accounts said the board had reviewed its assumptions for goodwill calculations, based on the weaker first half sales, but concluded there was no case for impairment in the carrying value of goodwill. For intangible assets, goodwill was calculated at $24.8 million, while the carrying value of its Chinese and Indian ventures totalled $13.1 million.

Earnings in its New Zealand unit bucked the trend, improving both revenue and earnings "due to the diverse mix of this business and was due to growth in sales of consumer wireless devices. This market has continued to grow in spite of the overall economic environment." Ebitda for the New Zealand business was $2.8 million on revenue of $50.8 million, compared with an operating loss of $1.9 million in the first half of the previous year.

Its French and UK businesses underperformed against expectations for the six months, as did its Chinese manufacturing joint venture, "due to slightly lower than forecast demand for general consumer products."

The UK and French units generated total revenues of $42.8 million in the half. While the UK unit, the smaller of the two, produced positive operating earnings of $3.9 million, the French unit showed an ebitda loss of $1.8 million.

"The outlook for this business is for continued growth driven by overall demand and improved margins due to improvement in manufacturing operations and yield," the notes to the accounts say.

Its Indian associate, Centum Rakon, were "slightly above expectations" thanks to improved margins and product mix, producing ebitda of $1.6 million, while its Chinese units had mixed fortunes, producing an ebitda loss for the period of $1.5 million.

(BusinessDesk)

© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Business Headlines | Sci-Tech Headlines

 
GenPro: General Practices Begin Issuing Clause 14 Notices

GenPro has been copied into a rising number of Clause 14 notices issued since the NZNO lodged its Primary Practice Pay Equity Claim against General Practice employers in December 2023.More

SPADA: Screen Industry Unites For Streaming Platform Regulation & Intellectual Property Protections

In an unprecedented international collaboration, representatives of screen producing organisations from around the world have released a joint statement.More

 
 
 
 
 
 
 
 
 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.