Rakon beats prospectus forecast by 9pc for year

Strong last-quarter sales and a more beneficial exchange rate mean Rakon has beaten its prospectus forecasts just a week after floating.

Profit for the year to March 31 was $4.8 million, 9 per cent ahead of forecast and well ahead of the previous year's $2.9 million.

This came on the back of revenue of $74.4 million compared with $71.4 million the previous year.

In the Auckland-based technology company's first day of trading last Tuesday, shares issued at $1.60 closed at $2.36 - a 47.5 per cent premium. After yesterday's results shares closed down 10c at $2.40.

ABN Amro Craigs research analyst Mark Lister said it was nice to see Rakon ahead of the prospectus.

"We knew they'd be up," he said. "On an exchange rate basis, things have turned the right way for them."

Rakon managing director Brent Robinson said a weakening dollar during March helped Rakon with its revenue base, about 95 per cent of which is earned in US dollars.

Rakon designs and manufactures high-performance crystals and oscillators used in global positioning systems products.

Demand had also been building in Taiwan during the last quarter and the new year for in-car navigation products, Robinson said. However, the company was comfortable with next year's forecast of $7.2 million profit on revenue of $90.6 million.

"We've only just started the year, so there's a lot of road in front of us. That's why we haven't done any movement there," Robinson said.

A forecast update for next year and progress report on capital investment would be given at the company's annual meeting on September 1.

To combat increased volatility with key New Zealand, US and Japanese currencies, the board has raised the level of protection on foreign-exchange exposure for this year.

Purchase commitments in Japanese yen were funded from US dollar receipts and forward-exchange contracts were now in place for 84 per cent of the predicted outgoings at an average rate of 113.3 yen for each US dollar.

Meanwhile, 93 per cent of the forecast residual US dollar receipts were covered by a combination of forward exchange and option contracts that should give Rakon a worst case average rate of US64c to the dollar.

"The directors of Rakon really want to stay focused on growing the sales and not watching our backs on the currency front," Robinson said.

The company said design work for GPS technology in mobile phones was under way with several second-tier phone manufacturers, which could translate into orders within 12 to 18 months.