Rakon continues growth, plans China expansion

Rakon Limited ASM August 2007 Media Release

Auckland, New Zealand

Rakon continues growth, plans China expansion

Strong underlying growth in Rakon's sales have seen the company remain positive about results for the 2008 fiscal year, despite adverse effects of the strong New Zealand dollar.

More details on an expected expansion into manufacturing in China have also been disclosed.
Rakon plans to build a new facility in southern China with a partner who is already part of the supply chain.

This factory will produce lower cost products for the booming consumer market and enable Rakon to remain competitive as higher technology solutions become commodities.

Due diligence has been largely completed and an application for land use consent is expected to be made by the end of the month. Construction is scheduled to begin before the end of the calendar year.

Brent Robinson, Rakon's Managing Director said, "It is also becoming more and more important that we position ourselves geographically close to our customers and right on the doorstep of what is a massive and fast growing consumer electronics market."

"As a result of this initiative it may be mistakenly thought that Rakon is moving all its manufacturing to China."

"I would like to clearly state that this is not the case. Our move into China is a logical expansion of our current global facilities.

"Rakon's New Zealand, UK and French manufacturing operations all remain strategically important to us and they in turn will continue to be expanded and/or developed as required to meet changes in demand."

Mr. Robinson said that expectations for the underlying business performance are unchanged from the beginning of the year.

Strong growth in the GPS market, in particular the Personal Navigation Device sector and the addition of new markets from the acquisition earlier this year are keeping the company positive about the outlook.

There is still significant potential as GPS finds its way into new applications, such as Mobile Phones. Mr. Robinson said it was encouraging to see companies such as Nokia and Research In Motion start to adopt GPS as a feature in their top end models.

Mr Robinson said there are exciting developments and new markets opening up for the company, including the 3G cellular infrastructure market, which is supplied largely out of Rakon's Argenteuil (France) facility, and the potential in emerging markets like Femto-cells and WiMAX, which use products produced in New Zealand and the UK.

"Volume shipments are on target for this time of the year," Mr. Robinson said. "Whilst we expect the underlying business to meet expectations the strong New Zealand dollar naturally will have an adverse affect on translated earnings. We previously advised a full year EBITDA range of NZ$32 to $38 million based on an average US$ to NZ$ exchange rate of $0.70. If the New Zealand dollar remains at its current levels we are likely to see an EBITDA of between $27 and $32 million for the full year."

ENDS

© Scoop Media