F&P Appliances turns to first-half profit, trims full-year guidance

Friday 26th November 2010

Fisher & Paykel Appliances turned to a first-half profit, from a year-earlier loss that included one-time charges to reorganise its global manufacturing and write down assets values. Sales weakened in the latest period, driven by poorer returns from North America and Europe.

Net income in the six months ended September 30 was $11.3 million, or 1.7 cents a share, from a loss of $82.4 million, or 16.3 cents a year earlier, the Auckland-based company said in a statement today. Sales fell to $549.9 million from $584.5 million.

The manufacturer of fridges, ovens, washing machines and driers took $107 million in one-time costs, writedowns and impairments in the year-earlier period, when it shifted plants to lower-cost countries and nearer to export markets, restructured its debt and eliminated jobs. The changes are beginning to bear fruit, with the company's gross margin rising 4% to $140.8 million, helped by a more favourable exchange rate.

"Our balance sheet position has strengthened, however appliance market conditions remain challenging," said chief executive Stuart Broadhurst.

The company lowered its guidance for full-year earnings and now expects earnings before interest and tax of $63 million to $70 million, from the $78 million it forecast at its annual meeting.

The company's appliances unit reported a 7% decline in operating revenue to $476 million, while EBIT climbed 18% to $6.8 million. For its finance unit, EBIT climbed 52% to $18.9 million, reflecting growth in interest and fee income and lower bad debts.

The shares fell 1 cent to 60 cents. In the past three months, the shares have surged 18%, outpacing an 8% advance in the NZX 50 Index. The shares are rated "outperform" based on the consensus of six recommendations compiled by Reuters.

BusinessDesk.co.nz

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