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Rakon is the latest firm planning to set up a factory overseas but the GPS technology company insists its New Zealand base will not suffer as a result.
The company posted a strong full-year result yesterday, with net profit more than doubling to $10.6 million.
Managing director Brent Robinson said the NZX-listed firm was in talks with a potential partner in China, although it was too early to discuss the scale of the investment.
"This is on top of what we're doing here in New Zealand, we're not looking to shut down any operations here in New Zealand," Robinson said.
"It's really to take opportunity with some of the growth that we're seeing in China for the local market as well as expand our overall capability."
Last month Fisher & Paykel Appliances said it would move production of washing machines and clothes dryers from Auckland to Thailand at the cost of about 350 jobs.
Rakon employs about 750 people worldwide, with about 500 employees at its Auckland head office where it makes high-performance crystals and oscillators used in global positioning products.
A base in New Zealand held advantages for development of products and processes, Robinson said.
"We would not want to lose that."
Rakon's shares hit a record high yesterday, closing up 21c at $5.23.
Net profit for the year ending March 31 was $10.6 million, compared with $4.8 million the previous year, and revenue of $106.2 million was up from $74.4 million.
Demand for personal navigation devices had shown strong growth in the second half, Robinson said.
"We are continuing to work hard to maintain our strong market share in the GPS sector," he said. "This is a market that continues to grow strongly and we feel will underpin a lot of our growth in the coming year."
Revenue in the current year was expected to be between about $200 million and $220 million, while trading profit (earnings before interest, tax, depreciation and amortisation) would grow by up to 87 per cent to between $32 million and $38 million.
The projections were based on an average annual exchange rate against the US dollar of about 70c, with about a quarter of the year locked in slightly below this level.
The weaker US dollar was impacting revenue growth with each 1c shift in the exchange rate equating to about $1.5 million of trading profit.
ABN Amro Craigs analyst Brett Orsler said it was a good result, with a bullish forecast for the current year despite the high exchange rate against the US dollar.
Orsler said it made sense to position a production facility in China - a relatively low-cost environment close to Rakon's largest market.
However, he did not think the Auckland plant, where most research and development was undertaken, would be at risk.
"It sounds as if the more commodity type products are going to be manufactured in China and the more high-tech, costly, higher margin type products will be still manufactured in their Auckland and their European facilities," Orsler said.
More than half Rakon's products are used in GPS applications, more than a third in the communications sector and 5 per cent in military and aerospace fields.
Asia accounted for 61 per cent of revenue, followed by North America at 25 per cent and Europe at 11 per cent.
Demand from the personal navigation device market was strong and recent releases of GPS enabled cell phones was a good indication that that market was maturing.
"We've seen a bit of that [GPS enabled cellphones] over the last few years but nothing to compare with the personal navigation device market but that is starting to take off for us this year," Robinson said. "We're forecasting quite strong growth into the GPS enabled phone this year."
The company did not pay a dividend. "We're a growth company so we're going to be using all our resources for growth rather than paying dividends," said Robinson.
