NZX listed electronics manufacturer Rakon has reported an after tax loss for FY2017 of $13.6m compared to a loss of $1.6m for FY2016 following a 16 percent drop in revenues to $94.7m.
The company said the decline was the result of a decline in revenues from the telecommunications market as equipment manufacturers reduced spend and declining sales of consumer global positioning systems products in which Rakon’s products are embedded.
However the company was able to reduce debt Net by $8.1m to $4.5m with cash proceeds from a share placement and technology license arrangement to Taiwan company Siward Crystal Technology Co.
Chairman Bryan Mogridge described the result as “disappointing”, saying “During the year, management has worked very hard to right size the business for optimum efficiency. … We have reduced risk in the balance sheet, lowering net debt by $8.1m and increasing operating cash flow to $9.5m. The reduction in operating expenses on an annualized basis of $8.9 million before restructure costs will have a positive impact on next year’s profit.”
Contributing to the reduction in operating expenses was a 16 percent reduction in employee numbers. Mogridge said: “During the year, management across the globe worked very hard at restructuring the cost base of Rakon, which has resulted in a reduction in team numbers. Those numbers have fallen from 479 to 402.”
He added: “undertaking this type of change, while often necessary, is never easy, and meant losing people who provided valuable contributions to the company.”
He concluded his review on an upbeat note saying: “Currently, there is an early and encouraging increase in demand from the large telecommunications market: as the saying goes, one swallow doesn’t make a summer, but the signs are positive.”
Founder stepping down after 50 years
Rakon celebrated its 50th anniversary on 4 April 2017 and Mogridge said founder Warren Robinson would retire later this year. “Warren’s contribution to Rakon, its customers, people and the wider New Zealand tech economy has been huge,” he said.