F&P announces profit drop, flags September price rise

By Chris Nicholls

AUCKLAND: Fisher & Paykel has announced a 14.5 per cent drop in profit for the full year to 31 March, citing a rising New Zealand dollar and costs from relocating its factories overseas from New Zealand.

The New Zealand whitegoods giant reported profit fell to NZ$54.2 million, down from NZ$61.1 million last financial year. Sales revenue was also down 0.9 per cent to NZ$ 1.4 billion.

However, Fisher & Paykel chief executive and managing director, John Bongard, said the result was pleasing, despite the falls, as it remained below competitors’ losses, showed an increase in US market share, despite a slowing US economy, and once currency losses were taken into account, showed a real profit.

“I think, measuring our full-year performance against our industry peers, that we are probably against the industry trends and showing normalised profit increase,” he said.

Bongard said some of his competitors [who remained unnamed], were suffering 10-15 per cent revenue drops, year-on-year and while US revenue was down, combined DCS and Fisher & Paykel revenue rose 5.5 per cent.

Australian operations performed well, Bongard said, with market share gains and sales up approximately 11 per cent.

However, material prices remained an issue, he said, with steel rising between 15-35 per cent, and raised the possibility of price rises from September as a result.

“Raw materials remained high during the period, and unfortunately, as most of you will be well aware, the high steel costs look like they’ve kicked back in for the year ahead. For us, the increases, which are quite substantial yet again, will kick in around September, and that, accompanied by oil, petrol and the flow-on effects into componentry such as compressors, will be unhelpful for the business going forward.

Bongard said while Fisher & Paykel would mitigate as many of those increases as possible, the September price rise was inevitable.

“We believe that price increases will be the order of the day in this industry. Obviously, our competitors are facing exactly the same sort of extreme price increases for their raw material, and we will be watching very carefully as we either follow or lead in each specific market around the world.”

In New Zealand, Bongard said the Elba brand had offset some negativity in the company’s local market, covering the entry-level sector.

Italian sales were “ahead of expectations”, Bongard said, but admitted currency difficulties with Euro/Sterling exchange rates had hurt the Italian factory.

Bongard also announced Fisher & Paykel was also exploring entering five Eastern European countries, including Azerbaijan, by September or October this year.

Speaking about the company’s Rayong, Thailand plant, Bongard said it was now producing up to 400-500 dryers and 400 washers a day and quality was “exceptional”.

The first grills from the company’s DCS operation in Mexico were due to roll off production lines today, Bongard said. Side-by-side refrigerators would be on-line from July, he said, and new US-focussed DishDrawers would commence production by December.

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