Tech company Rakon hikes profit forecast after higher demand for 5G networks

Monday, 18 January 2021

Rakon, which has a factory in Auckland, is seeing higher demand for its components.

Demand for superfast 5G telecom services is helping boost the profits of Rakon, which makes components for the industry.

Rakon said on Monday that it expects underlying pre-tax profit of between $20 million and $22m in the year ending March 31. That’s up from $14.8m last year, and $4m more than it previously expected.

“Demand from the telecommunications sector has been higher than expected,” said chief financial officer Anand Rambhai. “Globally, the roll-out of 5G networks is continuing, resulting in greater demand for Rakon products.”

Telecommunications makes up about two thirds of Rakon’s revenue, and the company highlighted at its half-year result in November that it was seeing very strong 5G demand from Asia.

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“Factors underpinning Rakon’s good performance are expected to continue, particularly 5G deployment,” Rambhai said.

Demand for the company’s products was also being driven by growth in global data volumes and cloud-based applications, and a global shortage of some circuits following a fire at a factory in Japan, he said.

Shares in Rakon jumped 5.3 per cent to 80 cents, making them the top gainer on the NZX at midday on Monday.

Rakon was asked by the market regulator earlier this month if it was complying with continuous disclosure rules after its share price spiked higher, and responded that it was compliant.