Rakon to shut UK plant in cost cutting drive, flags wider full-year loss
By Suze Metherell
Jan. 16 (BusinessDesk) – Rakon, whose shares have halved in the past year, plans to close its UK factory as soon as this year, taking a provision that would widen its full-year loss.
The maker of quartz crystals used in navigation systems and smart phones has advised workers at its Lincoln plant that it intends to close the facility, leaving only a research and development centre in the UK.
A board review showed “duplicate overhead structures and manufacturing capability exists between the Lincoln and New Zealand operations,” the Auckland-based company said in a statement. “The proposal is for a full closure of the plant with the manufacturing of products to be shifted to Rakon’s New Zealand plant.”
Should the closure be completed in the year ending March 31, Rakon expects to report a full-year loss of between $55 million to $59 million, compared with an earlier forecast of a loss of $54 million.
Rakon’s shares fell 2.6 percent to 18.5 cents, having traded as high as 38 cents a year ago and down from as high as $5.35 in November 2007.
Last year the company quit its Chinese operations to reduce debt. The company said today that its announcement on the UK factory won’t delay its target of reducing bank debt below $12 million by March 31.
Rakon also reiterated its target of a return to positive earnings in 2015, with earnings before interest, tax, depreciation and amortisation of between $10 and $15 million. On an EBITDA basis the company is forecasting a loss of between $5 to $8 million in the current year, a deterioration from its previous guidance of between a loss of $3 million and break even.