18 May 2012

Rakon's shares slump as its books slip into red

9:08 am on 18 May 2012

Shares in electronics company Rakon fell 7% after it announced a loss as demand for some products remained soft and the high New Zealand dollar diminished returns.

The company, which makes components for global positioning systems and mobile phones, lost $420,000 in the year to the end of March. A year earlier it had made a $8.5 million profit.

Revenue fell 6% to $178 million while earnings fell by almost half to $13 million, slightly below forecasts it issued in November.

Managing director Brent Robinson says revenue fell in Rakon's telecommunications business as companies deferred spending.

He says the telecommunications sector was a lot softer than expected in the second half of the year.

Mr Robinson says the main factor was the appreciation of the New Zealand dollar, but there's also been a softening in demand from its UK and French businesses which are supplying Telecom.

But he says the smartphone market is experiencing massive growth, and he says he's never felt better about how the business is positioned for growth.

Mr Robinson says the smartphone sector has particularly strong growth potential, and production at the company's recently-completed crystal-making plant in Chengdu in China is ramping up to cater for increased demand for smartphone components.

He says the smartphone sector is quite recession-proof, and demand is expected to grow from 500 million phones last year to 800 million next year.

The company's shares dropped 5 cents to 49 cents on Thursday.