REL: 1141 HRS Rakon Limited
GENERAL: RAK: Strong growth but high NZ Dollar erodes profits
Rakon is continuing to record strong sales growth but the highly volatile and
very strong New Zealand dollar is undermining profitability.
Managing Director, Brent Robinson said, "Our underlying global business is
performing well however currently our business is significantly impacted
by the NZD/USD and NZD/GBP exchange rates. The NZD has been trading at an
all time highs against both these currencies. In the past 18 months the NZD
has strengthened more than 20% against the GBP and over 25% against the USD.
To put this impact into context this equates to a reduction in cash earnings
in the current year of around NZ$20 million purely from the impact of
"If the NZD stays at these current levels we expect EBITDA for the March 2012
year to be in the range of NZ$14 - 18 million."
Robinson said that Rakon had foreign exchange protection in place to mitigate
any further negative impact on the current year's results should the NZD
continue to strengthen. He also noted that Rakon's strategy of expanding
globally and particularly into China would, in time, help hedge the impact of
currency movements. He further added that a number of cost savings
initiatives were being implemented across the business.
"Our underlying demand in the year to date has been very good with all our
business units experiencing volume growth compared to the same period last
year. In particular demand for our OCXOs manufactured in India has been a
standout and our French results for the year to date are significantly
improved on the prior year."
Rakon's Annual Shareholders Meeting will be held in Auckland on 9 September
and Robinson said he looked forward to providing a more detailed update on
Rakon's business and markets at the meeting.
End CA:00213180 For:RAK Type:GENERAL Time:2011-08-31 11:41:13