Wellington, May 22 NZPA - Quartz crystal maker Rakon today hosed down its growth forecasts but remained bullish despite recession prospects in the United States.

It reported its March year net profit rose 4 percent to $10.9 million.

The second half was down on the first half when a $5.74m net profit was posted.

It said the high New Zealand dollar and higher depreciation and amortisation charges offset the growth in Ebitda (earnings before interest, tax, depreciation and amortisation).

Managing director Brent Robinson said the GPS (global positioning systems) market was robust and growth would follow this year and in subsequent years.

He said most of Rakon's customers had "very robust" forecasts for GPS applications with some predicting to double growth.

"Though we are cautious about the financial markets at this time and have reduced our outlook compared with some of the forecasts in front of us, but in general we are fairly bullish on the GPS market going forward."

He said there were new opportunities of GPS technology in areas such as personal tracking devices, laptops, DVDs and cameras.

Installing GPS in cameras would become increasingly important for people posting photos on social networking sites, he said.

There was a risk of telecommunication companies holding back on spending due to the prospect of recession in the US.

He said there was a prospect the weakening NZ dollar would boost earnings with a one US cent move affecting the bottom line by about $1m.

Revenue from ordinary activities rose 65 percent to $174.3m mainly due to the contribution for the full year from a European acquisition completed in early March 2007.

In line with its policy, no dividend was declared.

The company said the New Zealand business continued to generate strong revenue growth, up 26 percent in US dollar terms on the prior year underpinned by sales volume growth of 46 percent. Sales volume growth in the second half declined to 39 percent from 53 percent in the first half.

The strength of the NZ dollar reduced the revenue growth when measured in kiwi dollars to 9 percent.

Ebitda rose 26 percent, or $5m, to $25.4m on the prior year and in line with guidance given in February 2008. It included a $2m one-off gain on the sale of equipment by Rakon into a joint venture with Indian-owned Centum Electronics.

Higher sales volume and reduced manufacturing costs due to new product designs, material costs savings and labour efficiencies were more than offset by the effects of the strong dollar and reduced sales prices.

Capitalised investment in new equipment and intangible assets totalled $13.9m for the year principally related to further capacity expansion in NZ, increased automation in NZ and Europe and investment in new products in NZ and Europe.

It incurred $8m costs on research and development activities.

Rakon's joint venture with Centum Electronics was completed and the first of three tranches of equipment was shipped from France in late March 2008.

Rakon shares have plunged from $5.80 a year ago to $3.28, down 2 cents today, although they have recovered from a low of $2.05 on May 18.

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