F&P profits rise but NZ dollar takes toll

By Chris Nicholls

AUCKLAND: Fisher & Paykel has posted a 4.3 per cent rise in normalised profit for the year to 31 March, but seen appliances revenue drop due to the rising New Zealand dollar.

The company’s annual report, delivered to markets today, showed company profits rose to NZ$65.45 million, up from NZ$63.4 million last year.

However, one-off costs from relocating its New Zealand and Australian manufacturing facilities to Thailand and Mexico meant after-tax profit fell to NZ$54.2 million, down approximately NZ$9 million on FY07.

In accordance with previous warnings on the effects of the rising Kiwi dollar, Fisher & Paykel announced operating revenue down NZ$16.9 million on last year to NZ$1.25 billion, while sales revenue fell NZ$74.9 million. However, the company said the NZ dollar effects concealed sales growth of 4.5 per cent in local currency.

Operating profit for appliances fell NZ$17.14 million, down from NZ$85.575 million.

Despite the revenue result, operating margin remained steady at 6.5 per cent.

In its report, Fisher & Paykel said the global manufacturing strategy initiated last year with its dryer factory relocation to Rayong, Thailand, would “improve the competitiveness of the business” and “was expected to lift profitability”.

Another major bugbear for the appliance industry right now, material cost increases, had been offset to some degree by “substantial gains” in cost cutting.

By market, Fisher & Paykel saw revenue rise 0.7 per cent in home country New Zealand, while Australian sales rose 11.3 per cent, despite the slowing economy. This compared with only three to four per cent growth in the whitegoods sector overall.

North American revenue fell 3.7 per cent, thanks to the dramatic slowdown in new home growth there, but aggregate figures, including the DCS brands saw a 5.5 per cent rise in revenue for FY08.

European sales revenue rose 18.4 per cent, despite a slowing market, but F&P said margins there fell due to Euro strength issues versus Pound.

Fisher & Paykel’s finance business, which the company considered selling at one point, saw revenue rise by approximately NZ$5 million to NZ$123,893, but saw profit before tax fall from NZ$29.56 million to NZ$26.14 million.

In keeping with previous remarks, F&P also forecast price rises later this year, thanks to increased material costs and confirmed its premium Izona range will launch in the first half of FY09.  

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