Rakon shares fall 9% after dollar warning
UPDATED 3.30pm- Shares fall after company warns high dollar could wipe $20 million from its earnings.
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UPDATED 3.30pm- Rakon shares (NZX:RAK) have fallen 9.3%, dropping by 8c to 78c after the company warned today that the high New Zealand dollar would hurt its bottom line despite increased sales.
Listed technology company Rakon is recording strong sales growth but says the the highly volatile and very strong New Zealand dollar is undermining profitability.
Brent Robinson, Rakon managing director, says, “Our underlying global business is performing well, however, currently our business is significantly impacted by the NZ dollar/US dollar and NZ dollar/pound exchange rates.
"The NZ dollar has been trading at an all time highs against both these currencies. In the past 18 months the NZ dollar has strengthened more than 20% against the pound and over 25% against the US dollar. To put this impact into context this equates to a reduction in cash earnings in the current year of around $20 million purely from the impact of currency.”
“If the NZ dollar stays at these current levels we expect EBITDA for the March 2012 year to be in the range of $14 – 18 million.”
Mr Robinson says Rakon has foreign exchange protection in place to mitigate any further negative impact on the current year’s results should the NZ dollar continue to strengthen.
He says Rakon’s strategy of expanding globally and particularly into China will, in time, help hedge the impact of currency movements, adding that a number of cost savings initiatives are being implemented across the business.
”Our underlying demand in the year to date has been very good with all our business units experiencing volume growth compared to the same period last year. In particular demand for our OCXOs manufactured in India has been a standout and our French results for the year to date are significantly improved on the prior year.”
Niko Kloeten
Wed, 31 Aug 2011
Wed, 31 Aug 2011
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Rakon shares fall 9% after dollar warning
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