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Electronics Production | March 03, 2009

Raymarine outsources primarily to Flextronics

The UK-based company Raymarine has outsourced the vast majority of its manufacturing of the Group's products to the EMS-giant Flextronics.
The Group's liquidity is mostly determined by patterns in trading, inventory levels, and foreign exchange movements. Markets for marine electronics declined significantly around the world in 2008 in the wake of the credit crunch. The extent of the global economic downturn meant that the Group's sales in all major territories declined in 2008. The economic outlook for 2009 remains uncertain and it is anticipated that the Group's markets are likely to be weaker during 2009 than in 2008 taken as a whole.

It is not common practice in the marine electronics industry to place orders on suppliers such as the Group for long periods ahead. This makes predicting the likely future pattern of trading less certain and it leaves the Group exposed to the build up of inventories when sales decline over a protracted period. That is the reason why –in certain circumstances – when raw materials exceed a certain level, the Group may be obliged to acquire the surplus above that level from Flextronics and fund these inventories until they are used up in manufacturing, Raymarine states in its fiscal report.

The company announced its fiscal report for 2008, stating a revenue of £134.9m (2007: £140.7m); gross margin was up to 48.1% from 45.0%. The adjusted EBITA was down 10.9% to £28.0m, while adjusted profit before tax was £17.3m (2007: £27.7m) down with 37.7%. Profit before tax reached £10.7m, down 54.4%; net debt up £13.8m to £93.5m, after £19.7m fx translation movement.

Peter Ward, Executive Chairman of Raymarine, commented: “Whilst the outlook for 2009 remains very tough, our strategy for Raymarine is to strengthen our position in the leisure marine market. We will direct our sales resource to work with our worldwide distribution to gain market share. The highly successful launches of G Series and A Series demonstrate how growth in market share can be achieved by leveraging our brand with new product ranges for both the small boat and large boat segments. The Board takes confidence in the hard steps that have both been taken and are being taken to re-establish an appropriate cost base for 2009; Raymarine’s market success and penetration into new sectors is well proven, however the outlook for the leisure marine market remains challenging.”

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