By Martin Vedris
SYDNEY: Fisher & Paykel wanted to reassure its customers that the deal with Haier gives the NZ-based whitegoods manufacturer access to new products and the Chinese domestic market.
Fisher & Paykel Australia COO, Mike Church told Current.com.au today that it is simply too early to go into detail about the exact nature of the new business agreement, because at this stage it is an agreement, with the details yet to be finalised.
Current received phone calls today from service agents wondering whether this new partnership will affect their business as Fisher & Paykel’s service agents are franchised businesses, whereas the Haier service is handled by service agents, not franchisees.
However, Church again said it was too early to speculate but he emphasised the news that Fisher & Paykel has taken over the distribution of Haier in Australia and New Zealand and that the company’s statement explains all the details that are available at this stage.
And in the statement, Fisher & Paykel highlighted that the new partnership include access to new products and global markets.
“This is a very exciting time for Fisher & Paykel and provides us with rapid access to products and markets that would take us many years to access on our own,” said Fisher & Paykel Australia COO, Mike Church.
Fisher & Paykel stated it will distribute the Haier brand in New Zealand and Australia and Haier will introduce the Fisher & Paykel brand to the Chinese market.
F&P stated that Haier has a 26.2% share of the appliance market, and distribution relationships with department stores and more than 36,000 franchise stores in China. F&P also stated that Haier estimates the size of the European style high-end appliances market in China to be 2.2 to 2.24 million units per annum.
“The formalisation of this relationship will fully globalise Fisher & Paykel’s business by opening up significant markets and providing cost, production, distribution and R&D benefits to Fisher & Paykel,” said Church.
F&P stated that key staff teams from both companies have been formed to explore and implement the opportunities in all markets and product categories.
“Fisher & Paykel has the right product to meet this demand with our award-winning range of innovative, premium cooking and laundry appliances,” said Church.
“Our strategic investment over the past two years in overseas production facilities has not only delivered cost efficiencies, but means we are geared to meet demand from new markets.”
In terms of the company’s existing global manufacturing operations, F&P said that the laundry production in Thailand is now operational and the conversion cost savings are exceeding expectations.
Also, North American washer production will be relocated to Thailand in October to further enhance these efficiencies and cost savings. F&P revealed that the Mexican relocation is almost complete with most production facilities commissioned and production capable. The transfer of cooking production from New Zealand to Italy is almost complete and the relocation of the Cleveland refrigeration plant to Thailand is meeting timelines.
In terms of the financial details of the Haier agreement, F&P stated that Haier has initially invested NZ$46 million and will subscribe for a 20% cornerstone holding in FPA representing a total investment of between NZ$80 million and NZ$82 million.
Additional equity will be raised through a rights issue with existing shareholders, including Haier, to be offered shares on a 1 for 1 basis at $0.41 per share. This offering is fully underwritten by Deutsche Bank AG and first NZ Capital Securities Ltd and will raise $143 million.
“The capital injection, equity raising, proceeds from planned property sales in FY2010, and steady reduction in raw materials and production costs will allow Fisher & Paykel to meet the challenges of the current economic climate and the capital needs of the Group,” said Church.
F&P said it forecasts higher earnings for the 2010 financial year despite the current challenging trading conditions, with an EBIT growth projection of 14.3%. This forecast does not include any synergies from the cooperation agreement with Haier.