Rakon HY24: Revenue down 29.7% and PBT down 99.3% to NZ$0.2m

What changed

Revenue fell 29.7% to NZ$61.3m from NZ$87.2m, and gross margin compressed about 730bps to 42.6% as cost of sales did not fall in line with the top-line decline. Operating profit fell 96.6% to NZ$0.8m, and PBT fell 99.3% to NZ$0.2m. Reported NPAT of NZ$0.5m exceeded PBT because of an income tax credit, so PBT is the cleaner read. By contrast, operating cash flow swung to a NZ$7.3m inflow from a NZ$0.0m result in HY23, and capex eased to NZ$6.0m from NZ$9.4m, producing pre-lease free cash flow of about NZ$1.3m. Cash fell to NZ$17.9m from NZ$25.7m, but gross borrowings also declined to NZ$4.5m, leaving the group still in a net cash position of about NZ$13.4m.

What matters

• Earnings collapse is operating, not one-off. PBT fell 99.3% on a 29.7% revenue decline and a 730bp gross margin contraction, indicating significant operating deleverage rather than a discrete charge. No non-recurring items were flagged in the excerpts.
• Cash conversion improved as inventory unwound. OCF of NZ$7.3m versus NZ$0.0m looks strong against earnings, but inventories are still NZ$60.0m at roughly 178 days versus 150 days a year ago, so the cash improvement reflects a smaller build than HY23 rather than a normalised working-capital base.
• Tax line distorts NPAT. The effective tax rate flipped to +213.8% from −28.5%, meaning the NZ$0.5m NPAT is flattered by a tax credit on a near-zero PBT. Anchor analysis to PBT of NZ$0.2m.

Expectations

No forward guidance, forward work, or stated target was disclosed. For shape context, FY23 was second-half weighted on revenue (HY23 was 48.3% of FY23) but first-half weighted on NPAT (HY23 was 69% of FY23 NPAT), so the seasonal pattern is mixed and not reliably supportive. Annualising HY24 revenue gives roughly NZ$122.5m, about NZ$57.8m below the FY23 anchor of NZ$180.3m. The release does not support a view on whether 2H24 recovers; it only confirms that the implied run rate is materially below FY23.

Quality of result

Low. The reported NPAT of NZ$0.5m is dependent on a tax credit; on a pre-tax basis the business effectively broke even. The operating cash inflow is real but is partly inventory-release driven, with inventory days still elongated to about 178. Pre-lease FCF of NZ$1.3m is positive but small, and total cash still fell NZ$7.9m year on year, indicating other outflows (lease, financing, FX) more than offset the operating improvement. The balance sheet remains net cash at NZ$13.4m and equity rose to NZ$154.2m, so capacity is intact, but ROE has fallen to 0.3% from 11.5%.

Unresolved

• No current-period underlying EBITDA was disclosed, despite the prior period and FY23 both citing it; this breaks the comparability of the company's preferred earnings measure.
• Drivers of the 29.7% revenue decline are not quantified by segment, geography, or end market in the supplied excerpts, leaving the question of whether this is cyclical destocking or share loss unanswered.
• Receivables of NZ$45.8m equate to about 136 days of revenue, with no prior-period figure for like-for-like comparison or commentary on collection risk.
• Capex of NZ$6.0m was still 9.8% of revenue with no commentary on whether the prior "growth investment" framing remains intact at this revenue base.

This briefing cannot assess order book, customer concentration, or management's outlook for 2H24, none of which are disclosed in the supplied material.

Key metrics

Analytical metrics

This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.