Fisher & Paykel reports 19.9% increase in profit

By James Wells

AUCKLAND: Fisher & Paykel Appliances has announced an increase in operating profit before tax of 19.9 per cent, but has admitted that the retail competition in the Australian market “remains intense”.

In its half year report, Fisher & Paykel Appliances announced profit of $NZ54.247 million, compared to a $NZ45.243 million a year earlier after sales of appliances increased in all markets while the company concentrated on reducing costs for the six months ending 30 September, 2006.

In a statement to shareholders, Fisher & Paykel Appliances chairman, Gary Paykel, said this improvement was achieved despite unfavourable currency movements, high raw material prices, softening demand generally in USA driven by higher interest rates and a slow down in new housing starts and high domestic interest rates in New Zealand which are among the highest in the western world.

“During the first half the Appliances Group managed to hold or grow market share in all its major markets. This is a pleasing result given the current economic conditions prevailing in most of our markets. Growth is expected to continue in the second half.

Australian sales showed good growth in a slow market, up 8 percent in Australian dollar terms to A$166.053 million, (A$153.691 million last year). This has resulted from first half market share gains.

The US market increased sales by 10.3 per cent to $US152.117 million over the corresponding period last year. In other markets, sales grew in the Singapore market by 11.4 per cent to $SG6.907 million and sales in the New Zealand market grew by 0.8 per cent to $NZ120.011 million.

“In Australia, retail competition remains intense. The overall market size reduction that occurred last year appears to have abated with this year’s first half figures indicating slight growth. Our market share during the half was up on the previous corresponding period,” Paykel said.

“In New Zealand, the Group retained the market share gains achieved in the second half of the last financial year, despite the overall market being down on the previous year. A price increase was implemented in September.

“High prices for commodities used in raw materials such as steel, plastics and copper continued during the first half. Although raw material price levels appear to have reached a plateau, the outlook still remains uncertain. A continued strong focus on “cost down” cushioned the full impact of these exceptionally high prices during the half.

“Sales growth has slowed in the USA, in line with general market conditions. We continue to increase our presence in this strategically important market. The SmartLoad dryer line and motor manufacturing plant were recently transferred ahead of schedule to our factory in Clyde, Ohio, which now manufactures clothes washers, clothes dryers and motors for the North American market.

”There are now nine Fisher & Paykel operated warehouses in North America through which we distribute to over 4,400 stores. We are poised for further growth in this market and are examining additional options to increase distribution. The motor contract with Whirlpool continues to ramp up with supply now direct from our manufacturing facility in Clyde.

“The economy in Singapore has recovered resulting in improved sales levels. The Fisher & Paykel brand remains the number one non-Asian brand in this market.

“New products in three product categories, namely Project Luna gas cooktop in cooking, AquaSmart in laundry and Ice and Water in refrigeration, are due for release in the second half. These have been received positively by the trade and are expected to further drive sales, particularly in the local markets of New Zealand and Australia. These new products will be released to the wider markets in the new financial year.

“The review of all parts of the business to identify opportunities to make savings continues.”

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