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

 


No savings this year for Rakon manufacturing shift to China

No savings this year for Rakon’s manufacturing shift to China, grand plan coming in July

By Paul McBeth

May 23 (BusinessDesk) - Rakon, which makes crystal oscillators used in smart phones and navigation systems, doesn’t expect dividends from its decision to shift its local manufacturing to China this year, but is promising investors will get a better steer on its fortunes in a July update.

Last year’s decision to cut up to 60 local jobs and shift manufacturing to China won’t provide any boost to the company’s profit margins this year, with the $10 million improvement flagged in November likely to be further out, managing director Brent Robinson told a conference call. Rakon’s gross margin shrank to 23 percent from 29 percent a year earlier.

The Auckland-based company reported a loss of $32.8 million in the year ended March 31, wearing a $17.3 million impairment charge on its China-Timemaker and New Zealand units, with earnings before interest, tax, depreciation and amortisation of $5.1 million, near the bottom end of a twice-downgraded forecast.

Rakon’s board plans to slash its debt to $13.5 million by the end of March next year from the $36.1 million it has currently drawn on, as part of a rejigged balance sheet “properly aligned to market opportunities and solid profit growth,” it said.

That will be revealed to investors in July, though because of confidentiality agreements Robinson said he couldn’t go into further detail does.

A rights issue “hasn’t been discussed at this point” and isn’t being considered “at this stage,” Robinson said.

Rakon’s shares plunged 16 percent to 21 cents, having already shed 32 percent this year. That values the company at $40.1 million, a 70 percent discount to its net tangible assets. The stock is rated an average ‘hold’ based on four analyst recommendations compiled by Reuters, with a median target price of 25 cents.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Housing: Affordability Drops 14%, Driven By Auckland Prices

Housing affordability across New Zealand fell 14 percent in the year ending November 2014, with Auckland’s lack of affordability set to reach levels it hit during the height of the global financial crisis, according to the latest Massey University Home Affordability Report More>>

ALSO:

The Dry: Fonterra Drops Forecast Milk Volumes By 3.3 Percent

Fonterra Cooperative Group, the worlds largest dairy exporter, reduced its milk volume forecast for the 2014-2015 season by 3.3 per cent due to the impact of dry weather on production in recent weeks. More>>

ALSO:

Strike: Lyttelton Port Workers Vote To Escalate Dispute

Members of the Rail and Maritime Transport Union (RMTU) at Lyttelton Port today voted to escalate their industrial action. Around 200 RMTU members have been operating an overtime ban since 17 December and today they endorsed a series of full withdrawals of labour at the port. More>>

ALSO:

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news