Daily ShareChat: Fisher & Paykel Appliances

By Jenny Ruth

Tuesday 6th October 2009

Fisher & Paykel Appliances Holdings' first half results are likely to be well below last year's first half, says Morningstar Research.

"While we expect profits will recover in the second half as the benefits of the global manufacturing strategy, together with lower interest expenses, become apparent, it won't be enough to make up for the shortfall witnessed in the first half," Morningstar says.

It is forecasting net profit will fall from $33.8 million in the year ended March 2009 (and from $72.5 million in 2008) to $23 million in 2010 before rising to $51 million in 2011.

"Our 2010 estimate is at the higher end of management's guidance and assumes much lower margins for the appliances division than originally expected," it says.

"In 2011, the firm will benefit from further cost reductions, reflecting the full benefits of its relocation initiatives and significantly lower interest expenses."

Morningstar is assuming no dividends for 2010 and 2011 because the company is unlikely to pay any dividends until its amortising debt facility has been completely repaid and until the appliances business recovers.

Nevertheless, "we are excited about the potential synergies Fisher & Paykel can realise through its partnership with (20% shareholder) Haier and its possible entry into the fast-growing Chinese market."

BROKER CALL: Morningstar Research rate Fisher & Paykel Appliances as accumulate (raised from hold because of the significant decline in the share price.)

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