15 Nov 2013

Rakon defends selling major stake in Chinese facility

7:56 am on 15 November 2013

Rakon says selling most of its factory in China was the right thing to do despite the company making a loss because of the sale.

The crystal timing devices manufacturer on Thursday reported a $45.7 million net loss for the six months to September with just over half that due to selling 80% of its Chengdu factory.

Managing director Brent Robinson says the result is disappointing but selling its assets in China was the right move.

"If we look at the further erosion of prices and negative margins that we see in that market, we believe that we absolutely have done the right thing."

Mr Robinson says Rakon's partner in China is much better positioned to make the necessary capital investment and hopefully grow the business to a strong player in China.

Rakon's first-half loss widened from the previous year's $3.96 million.

The result is also worse than the $33 million loss Rakon reported for the 12 months to March.

But Mr Robinson, is promising the company will make an operating profit in its second half and reaffirmed guidance the operating result for the full year will be between a $3 million loss and break-even.