By Patrick Avenell

Fisher & Paykel’s six-month profit for the period ending 30 September 2011 declined by more than 90 per cent compared to previous corresponding period, due mostly to $8.5 million worth of one-off costs.

The publicly traded appliance and financial services company recorded a profit of $976,000 for the six-month period, down over $10 million from the $11.3 million profit in the six months to 30 September 2010.

The majority of this decline is attributed to two adjustments: $2.5 million spent to exit an onerous lease and $5.9 million in litigation costs in F&P’s finance business.

In addition to these one-off costs, managing director and CEO Stuart Broadhurst said trading conditions had remained difficult for the company.

“While our result is far from satisfactory, it reflects the reality of tough economic conditions, high raw material prices and depressed whitegoods spending, especially in Australasia, North America and Europe,” Broadhurst said.

“That said, we do see positives in our result from our Appliances’ global manufacturing strategy, a strong contribution from the Finance business and lower interest costs due to lower debt levels.”

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Broadhurst noted that F&P reduced its $100 million debt by $6 million during the six months to 30 September 2011. Fisher & Paykel has also successfully renewed its banking facility for another three years.

While F&P’s Finance business remains strong, even with the litigation costs incurred by a New Zealand High Court case, its Appliances business has struggled due to challenging trading conditions and the appreciation of the Australian Dollar.

These two factors contributed to the Appliance business recording a loss before interest and tax of $2.4 million compared to $6.8 million for the previous corresponding period.

For its full year results, Fisher & Paykel has forecast earnings of around $42 million, made up of $10 million from the Appliances business and $32 million from the Finance business.