Rakon earnings rise but profit declines

AUCKLAND: Hightech components maker Rakon lifted fullyear earnings 10%, meeting guidance, as 4.5/5G telecommunications infrastructure demand continues to grow. However, profits were down on last year and debt soared.

Underlying earnings before interest, tax, depreciation and amortisation were $13.3 million in the year to March 31, versus $12.1 million in the previous period and in line with its guidance of between $12 million and $14 million, the Aucklandbased company said.

Sales were $114 million, up 13% on the previous year and increased revenue across the telecommunications and space and defence markets offset lower revenue in the global positioning market, it said.

Although net profit tumbled 66% to $3.4 million, or 1.5c a share, Rakon noted the previous year’s $10 million profit included $8.8 million of gains recognised from the sale of property in Argenteuil, France.

The previous year profit was also bolstered by a dilution gain and sale of shares in ‘‘internet of things’’ startup Thinxtra. The value of Rakon’s investment in Thinxtra changed from $5.3 million in March 2018 to $4.5 million at the end of the current financial year.

‘‘When the oneoff gains are excluded it was pleasing to see the yearonyear growth in core net profit on the back of stronger 4.5/5G telecommunications infrastructure demand and continuing growth in the defence segment,’’ managing director Brent Robinson said.

‘‘The rollout of 5G continues to be our biggest opportunity and challenge. Rakon is well positioned with a good share of business awarded by tier 1 customers. The challenge for Rakon is to meet existing demand and continue to bring to market new products which meet the higher specifications demanded by 5G applications.’’

No dividend will be paid but Rakon said its policy was to pay a dividend of up to 50% of the aftertax profit ‘‘if considered fiscally appropriate’’.

Mr Robinson said a key event during the year was the May 2018 acquisition of the remaining 51% of its previous joint venture Rakon India Private.

‘‘With Rakon now having full decisionmaking control . . . it was pleasing to see India’s positive contribution to the group’s full year result,’’ he said.

Rakon shares recently fell 1.5% to 32c, and have risen 8.3% so far this year. — BusinessDesk