By Jenny Ruth
Thursday 7th April 2011
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Fisher & Paykel Appliances show 4% year-on-year volume growth from replacement demand and broader distribution in the year ending March 2012, says Adrian Allbon, an analyst at Goldman Sachs & Partners.
"We expect building-related demand to remain subdued across key markets before stronger growth in full-year 2012," Allbon says.
He expects whitegoods manufacturers could be facing underlying raw materials inflation of 8%, partly offset by his firm's expectation for a stronger average New Zealand dollar/US dollar cross rate.
"One of the key reasons we remain attracted to the Appliances story is the management focus over the last 18 months on disciplined product development," Allbon says.
He is expecting the company to introduce new products and to refresh existing ranges in the coming year.
He expects the finance company will show weak underlying growth, given the general macro pressures on the New Zealand consumer, and that net receivables will decline by 6% due to the loss of the Harvey Norman Q-card business.
"On a more positive note, the recent Reserve Bank OCR (official cash rate) cut combined with our own expectation for no hike before March 2012 should underpin another year of attractive funding costs," Allbon says.
"The only issue we foresee will be managing debenture re-investment risk (27% of funding) post the expiry of the government guarantee."
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