Rakon issues profit warning

Last updated 12:44 20/12/2012

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NZX-listed hi-tech manufacturer Rakon has advised of a significant drop in its full-year earnings forecast due to a delay in the sales programme in its high reliability and smart wireless device segments along with an expected lower margin on some consumer products.

In August Rakon indicate its full-year earnings before interest, tax, depreciation and amortisation (Ebitda) would be in the range of $14 million to $16m but it has now revised that down to a Ebitda range of $8m to $12m.

Managing director Brent Robinson said the company had plans for permanent cost reductions which had been previously signalled to the market including cutting 60 New Zealand jobs and shifting more manufacturing offshore. These would save $10m per year and he said the company remains on track for around 70 per cent of those changes to be in place by April next year.

The company had previously stuck to its full-year earnings guidance after reporting bigger than expected losses in the six months ending September. First-half Ebitda fall 24 per cent year on year to $4.7m.

The company booked a $3.96m loss for the period - after reporting a $259,000 loss for the same period last year. Revenues fell 5 per cent to $89.4m.

Robinson then attributed the result to continued weak demand in telco infrastructure and ongoing costs of moving manufacturing to cheaper sites in China and India.

The company, which makes crystal oscillators for improving the precision of wireless signals, said then it was positive about its second-half prospects.

Rakon has a history of missing forecasts.

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- BusinessDay.co.nz

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