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Rakon shares drop 4.6% as 2014 loss widens to $79.9m on asset writedowns, depreciation

Shares in Rakon [NZX: RAK] dropped 4.6 percent, making the stock the second-worst performer on the NZX All Ordinaries Index, after the maker of crystal oscillators used in smart phones and navigation systems said it lost more than it expected last year as its assets fell in value.

The Auckland-based company said it had a loss of $79.9 million in the year ended March 31, wider than its forecast loss of between $55 million to $59 million, and its $32.8 million loss the year earlier. The latest figures are unaudited and the company said its full earnings will be released May 22.

Rakon expects to write down the goodwill of its UK factory by $15 million as part of a plan to shift manufacturing to New Zealand in the current financial year. In addition, other property, plant and equipment was assessed as having a reduced useful life, bringing forward depreciation of $7.4 million and the company has also finalised the impairment following the sale of most of its stake in its Chinese factory to repay debt.

Shares in Rakon dropped 1 cent to 21 cents, taking their slide over the past year to 8.7 percent.

The company said its expectation for a 2014 loss in 'underlying' earnings before interest, tax, depreciation and amortisation remains unchanged of $5 million to $8 million.

Meantime, it met its target of reducing bank borrowings below $12 million at March 31, Rakon said.


Comments and questions

Ray-gone, not Rakon.

Irony is a company that makes GPS components that is completely lost and can't give any positive guidance to the markets. PR101 says they should have done a huge write down in 2013 instead of reassuring everyone that they had made all the changes they needed to.

If Rakon's components performed like their governance, then we'd read countless articles about cars driving into volcano craters and planes landing in Haiti instead of Tahiti.

The minute they started manufacturing in China this was a dead duck, they also seem to have an enormus amount of trouble issuing accurate guidelines to earnings or lack of etc.

This is a typical example of a public listed company run by a family for a family. The shareholders have been stripped of their shirts by cronyism. Isn't it ironic, they develop a product that is, and can be, used globally in every damn device one can think of and the directors and CEO's take that opportunity and turn it into custard.