F&P’s Elba plant brings welcome sales growth

By Matthew Henry

AUKLAND: Despite a 4.3 per cent dip in after tax profit for the 2007 financial year ending 31 March 2007, Fisher & Paykel saw revenue growth during the period driven up by its Italian Elba plant, acquired from De’Longhi last August.

While profit dipped compared with the year before, appliances revenue grew 19.5 per cent to $1.29 billion. However, excluding the additional sales generated by the Elba acquisition, appliances sale revenue grew just 7.9 per cent during the year, according to the company’s financial reporting for the 12 months to 31 March.

F&P’s European sales took off last year on the back of the $A132 million Elba purchase, growing 626.8 per cent to over $98 million, compared with $13 million the previous year.

“We are pleased with the acquisition, however high steel prices and the disruption in this Italian market as we transition to direct distribution, impacted earnings,” said Fisher & Paykel chairman, Gary Paykel.

“This impact has been partially offset by the introduction, late in 2006/07 fiscal year, of the Fisher & Paykel branded range of Italian manufactured cookers. We expect to commence direct distribution in the Italian market by the middle of this fiscal year.

“The manufacturing synergies foreshadowed at the time of the acquisition are being progressively realised into the three cooking plants in New Zealand, USA and Italy. These are expected to be of benefit during the new financial year and beyond.”

The company considers its new Italian manufacturing base as a key springboard for its expansion into the European market, which currently accounts for a relatively small proportion of its $1.4 billion in global appliance sales.

Fisher & Paykel’s new Italian-made cooking range – the first product of its Elba plant – was launched in late April. Called the Designer Series, the built-in ovens feature European styling with darkened triple-glazed glass and large capacities.

The range is endorsed by celebrity chef Tobie Puttock, head chef at Melbourne’s Fifteen restaurant, which is part of an international restaurant chain started by Jamie Oliver in the UK.

In other markets, Fisher & Paykel will increase brand advertising in the USA and expects further market penetration in Europe this year.

“The overall market in the USA continues to be in decline. This had led to intensified competitor activity, particularly prior to Christmas, as major suppliers fought to retain sales volumes. Under these conditions it is pleasing that our sales revenue increased by 5.2 per cent over the previous year in US dollar terms,” said Paykel.

Cost cutting within the organisation will continue, particularly with the relocation of its New Zealand laundry product manufacturing to Thailand, but certain economic factors make the outlook for this financial hard to predict, said the company.

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