F&P posts profit increase, but choppy waters ahead

By Chris Nicholls

SYDNEY: Fisher & Paykel has announced a profit increase for the past financial year, but warned sales could drop 50 per cent on this year’s results for the first half of this financial year.

At the company’s shareholders’ meeting yesterday, Fisher & Paykel said net profit after tax came to $65.5 million, up 4.3 per cent over the previous year. While one-off relocation costs took the shine off that figure, the final result still came in at $54.2 million.

Despite the tough environment, Fisher & Paykel retained a 50–55 per cent market share in New Zealand and saw increased sales here, up 11.3 per cent on the previous year. The company put this down to strong AquaSmart and Ice and Water refrigerator sales.

Other markets saw mixed results, with US sales up 5.5 per cent, despite the slumping housing market, and Asian markets, especially Singapore and Hong Kong, showing “consistent growth”. However, EU and ‘rest of world’ markets only grew at a “satisfactory” rate.

Things are not looking so rosy for the future, though, with F&P saying price increases across the range and around the world would occur in the next two months, and global markets remaining in a slump.

Fisher & Paykel chief executive, John Bongard, said the New Zealand market had fallen between seven and 10 per cent compared to the previous year, and that the Australian market remained “uncertain”.

However, in a more positive spin, he said F&P had seen Australian sales increase despite this, up five per cent in the first four months of the current fiscal year.

Bongard also said there had been “no general improvement in the USA market”, but again, pointed to a sales drop of only 1.4 per cent, despite a 10-15 per cent market fall overall.

Investors may become nervous on comments that this year’s first half after tax result was expected to be “approximately 50 per cent down on the previous corresponding period”, though, and that the company expected to post a $7- 10 million loss for the period.

While second half earnings are expected to improve, both normalised and reported sales figures are predicted to be at the lower end of analysts’ expectations.

Bongard put much of this down to slow markets, high raw material costs and lower interim production levels while the company attempts to reduce inventory.

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