Rakon, which makes crystal oscillators used in navigation devices, narrowed its first-half loss and affirmed its guidance for annual underlying earnings after cutting costs by shutting unprofitable operations around the world.

The Auckland-based company reported a net loss of $3.4 million, or 1.7 cents per share, in the six months ended Sept. 30, compared to a loss of $45.7 million, or 22.3 cents, a year earlier, it said in a statement.

The manufacturer reported underlying earnings before interest, tax and depreciation of $4.3 million the half, compared to an underlying Ebitda loss of $4.7 million a year earlier, as new mobile phone technology drove growth in its telecommunications unit and it managed to improve margins after a major restructure over the past year. Revenue fell 24 percent to $61.4 million.

"The positive impact of our significant structural realignment taking place over 2013-2014 is starting to show through in our financial results," chief executive Brent Robinson said. "While revenues have declined as planned, it is pleasing to see that our strategy to focus on better product and operating margins is taking effect."

Rakon has been exiting the smart wireless device market, which didn't deliver big enough margins, to focus on the burgeoning telecommunications sector, and has shifted manufacturing from the UK and France to New Zealand and India as part of restructuring to reduce its global workforce by 45 percent and slash its operating costs.

The company affirmed its annual guidance for underlying Ebitda of between $10 million and $15 million in the 12 months ending March 31, 2015, with higher profitability expected in the second half to come from its telecommunications unit and higher revenues from its space and defence segment.

"The company will focus on increasing throughput in manufacturing volumes in New Zealand following the transfer of production from the UK as well as the increased product demand, to take further advantage of the telecommunications growth that we are experiencing," Robinson said.

The company's New Zealand unit narrowed its underlying Ebitda loss to $920,000 in the half from $4.5 million a year earlier, while revenue shrank 40 percent to $23.2 million. The UK division reported a 38 percent drop in earnings to $1.6 million on a 24 percent decline in sales, while the French segment narrowed its Ebitda loss to $32,000 from $5.6 million on largely flat revenue of $28.2 million.

Rakon has been focused on reducing its bank borrowings as part of its restructure, and had net debt of $8.2 million as at Sept. 30, down from $27.1 million a year earlier. Its operations generated a cash outflow of $30,000 in the half, compared to an inflow of $7.8 million a year earlier, and has cash and equivalents of $3.9 million at the balance date.

The board didn't declare a dividend, and has previously dangled the prospect of cash returns to shareholders once the current financial year is over to repay their support after successive years of underperformance. Rakon traditionally steered clear of paying dividends, arguing it was creating more value by retaining earnings to drive growth opportunities.

The shares last traded unchanged at 34.5 cents, and have climbed 77 percent this year.