Rakon confident earnings will improve this year, chairman Mogridge says
By Tina Morrison
Sept. 12 (BusinessDesk) - Rakon, which makes crystal oscillators used in navigation devices, reiterated that it expects earnings to turn around this year as it shutters factories and reduces staff to save money.
The Auckland-based company is "confident" it will meet its previous forecast for underlying earnings before interest, tax, depreciation and amortisation of between $10 million to $15 million in the 2015 year, compared with an underlying Ebitda loss of $7.5 million in 2014, chairman Bryan Mogridge said in notes for delivery at the company's annual shareholder meeting today.
Rakon has been exiting the smart wireless device market, which didn't deliver big enough margins. It is turning its focus to the more profitable telecommunications sector as 4G mobile networks are developed around the world, and expects increased demand for its space-grade oscillators and higher specification "ruggedized' oscillators for GPS systems for automated farming equipment, diggers and dump trucks.
The company is shifting manufacturing from the UK and France to New Zealand and India as part of restructuring to reduce its global workforce by 45 percent, which it estimates will save $12 million in operating expenses in 2015. The latest changes have resulted in more than 210 staff either made redundant or not re-employed at a cost of $7.2 million, Mogridge said.
Rakon has pulled back its debt facility needed to fund the restructuring. It reduced the facility by $5 million from $22 million as a result of improvements to working capital and cash management, managing director Brent Robinson told the meeting.
Shares in Rakon advanced 5.3 percent to 30 cents, and have gained 46 percent so far this year.