Plant closure lifts Rakon into profit

GPS crystal manufacturer Rakon recovers from an NZ$83.8 million net loss in 2014 after shuttering a UK plant.

Restructuring and exchange rate gains have lifted New Zealand GPS crystal manufacturer Rakon out of the red to record a small profit, despite lower sales, for the year ended 31 March 2015.

Brent Robinson

Rakon reported a net profit of NZ$3.2 million after the company slid into a NZ$83.8 million hole in 2014.

The Company also reported underlying EBITDA of NZ$15.4 million compared to a loss of NZ$7.5 million in 2014 after a strong second half performance.

During the year, Rakon closed its Lincoln plant in the UK and transferred its manufacturing operations to New Zealand.

"The company has benefited as expected from reduced operating expenses in the second half as a result of the Lincoln closure," Rakon CEO Brent Robinson said.

"Our strategy to focus on higher margin products and markets has resulted in much improved operating margins for the year, supported by a strong second half performance."

Rakon said it is capturing strong growth from 4G deployments of new base station equipment, which contributed to an increase in earnings from its joint venture, Centum Rakon India, up NZ$1.3 million for the period to NZ$3.3 million.

Significant growth also came from the small cell telecommunications market, as network operators invested to deploy the infrastructure needed to meet the demand on networks coming from growth in data volumes.

Space and defence revenues also increased in the second half.

Operating cash flows of negative NZ$3.6 million were the result of restructuring pay outs and growth in working capital.

Robinson said Rakon is optimistic for prospects in 2016 as it will enjoy a full-year impact from the plant closure and expects to benefit from a lower average NZD:USD exchange rate.