Electronic components manufacturer Rakon more than doubled annual earnings, beating its own forecast, as revenue jumped on the growing demand for 5G telecommunications products amid a worldwide chip shortage.

The company, which provides telecoms equipment for 5G networks and datacentre infrastructure, reported underlying earnings before interest, tax, depreciation and amortisation (ebita) of $54.4 million in the 12 months ended March 31, up from $23.5m a year earlier and beating its February forecast for earnings of between $49m and $53m.

That outperformance came after Rakon had previously upgraded its earnings outlook four times over the past year, navigating its way through supply chain disruptions and profiting from the difficulty telecom companies had in sourcing microchips.

The company’s telecommunications segment accounted for 50% of total revenue for 2022, generating $86.2m, 12% higher than the previous year. Total revenue rose 34% to $172m.

“This has been a year of tremendous progress for Rakon. We have scaled up significantly to meet strong core market growth as well as new opportunities stemming from worldwide chip shortages,” chief executive Sinan Altug said in a statement.

The manufacturer scaled up its production in response to worldwide chip shortages, leading to $30.8m of revenue, adding $18.4m to its gross margin.

The wider margin contributed to net profit soaring to $33.1m, from $9.6m the year before.

The manufacturer’s net cash position improved by $13.5m to end the year at $23.2m.

That rapid growth prompted a change in the company’s dividend policy, which had previously been to pay up to 50% of net profit if it was fiscally prudent.

Chair Lorraine Witten said the new policy supports Rakon’s future development as a growth company with capital to fund future opportunities.

“The company intends to prioritise the use of cash surpluses towards capital investment, acquiring skills and R&D projects that deliver our strategic growth objectives,” said Witten.

The company’s shares fell 4.3% to $1.56 in mid-afternoon trading on the NZX.

Rakon invested $13.1m in research and development on ASIC semiconductor chips and their associated products, its new XMEMS nanotechnology, and a new suite of Newspace products for Low Earth Orbit (LEO) satellites.

Altug said Rakon will remain focused on the market opportunity and accelerated product development by increasing capacity in New Zealand and India.

“The global roll-out of 5G is expected to continue for a good part of this decade, expanding as 5G millimetre wave networks pave the way for more data-heavy applications and as datacentres further enter the ecosystem,” he said.