Rakon swings back into profit

Rakon (NZX:RAK) has bounced back after a tough year, reporting a half-year net profit of $5.6 million, compared to a $6.2 million loss in the same period last year.

It also achieved a significant increase in revenue and earnings, with revenue up 31% compared to the same period last year.

Ebitda for the six months was $13.5 million, up 778% from the previous year.

Rakon says it is currently well positioned in all of its markets and is comfortable with the current range of brokers estimates for its 2011 year, which projects EBITDA of between NZ$25 and NZ$30 million.

Brent Robinson, Rakon managing director, attributed the increase to good recovery and growth across all segments of Rakon’s business.

He said Rakon was continuing to expand its market share in the telecommunications market and demand from network infrastructure customers had been strong.

“New emerging technologies which we supply, such as femtocells, have also begun to ramp up in volume which helps to provide a sound base for long-term growth,” he said.

“We have also been able to establish strong positions with leading smart-phone manufacturers. In the first half of the year we shipped over 10 million units, which positions Rakon well to accelerate growth in this market as our new Chengdu factory comes on line during the middle of next year.”

Mr Robinson said the results continued the improvement that began in the second half of the previous financial year, when the company began to rebound from the impacts of the global economic crisis.

“Although there is a lot more work to be done, we are now beginning to see the financial returns for the effort we have put in over the last couple of years.”

He said over the past six months Rakon has continued to invest heavily in product development, recently launching the world’s smallest OCXO, the ‘Mercury’ and it has many more products in the pipeline.

In August it acquired a former competitor, Temex, which “further enhances our portfolio of products and builds the depth in technical expertise in our organisation.”

Rakon has also matched this product investment with significant expansion of manufacturing capacity.

Both the Indian joint venture and UK facility have doubled capacity to meet growing demand from telecommunications customers.

Rakon’s Auckland facility has also increased capacity as demand from consumer markets has begun to increase.

“We have not only invested in new equipment but also improved processes to accelerate the speed of our manufacturing and better utilise existing equipment,” Mr Robinson said.

Construction of our Chengdu facility is also well underway, with the building shell expected to be completed as expected by the end of 2010, he said.

“Fit out and equipment installation will follow and we aim to begin commercial operations in July 2011. This will provide us with the platform we need to make us even more competitive in consumer markets.”