Rakon shares jump 20% on prospect of return to profitability

Rakon shares jump 20% on prospect of return to profitability

By Paul McBeth

Aug. 14 (BusinessDesk) - Rakon shares jumped 20 percent after the company said it anticipates a return to profit in the current financial year as new space and defence customers and recovering demand among telecommunications company's bolsters the components maker's revenue.

The Auckland-based company predicts a positive net profit in the year ending March 31, 2018 with underlying earnings before interest, tax, depreciation and amortisation of between $9 million and $11 million, it said in a statement. That compares to a loss of $13.6 million in the 2017 financial year on underlying ebitda of $4 million. The shares climbed 3.4 cents to 20.5 cents, the highest since May 18.

Managing director Brent Robinson said the company's space and defence unit had attracted new customers in recent years which are now starting to generate increased revenue, while a lacklustre telecommunications sector was starting to show signs of improvement.

"While the overall market remains sluggish, we are picking up new customers for some of our higher-margin components," Robinson said. "The increase in revenue for the first three months versus the prior corresponding period, was reflecting positively in improved earnings which it expected to sustain throughout the balance of FY2018."

Rakon tilted its focus to the telecommunications sector after rivals in the smart wireless market caught up, turning what was once a niche product into a commoditised one. That helped the company return to profit in 2015, but a slump in spending by network operators weighed on the firm the following year.

It has since restructured the business again, and Robinson today said lower operating expenses will continue to register on the bottom line.

Rakon will hold its annual meeting on Thursday in Auckland.

(BusinessDesk)

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