Fisher & Paykel's finance business drives earnings

NZPA

Thursday 25th August 2011

Fisher & Paykel Appliances is forecasting earnings before interest and tax (ebit) between $42 million and $52 million, mostly from its finance business.

The company told shareholders at its annual meeting that the appliances division would have annual ebit of between $10m and $20m and the finance business was expected to have an ebit of $32m.

"The finance team has delivered an outstanding result at a time when most New Zealand finance companies have been found wanting," chairman Keith Turner said.

The finance business had committed wholesale bank funding in place to ensure the repayment of maturing retail debenture stock in the lead-up to the expiry of the Crown’s Retail Deposit Guarantee Scheme on December 31, 2011.

The group reported a net profit after tax of $33.5m in the year to March 31, which was a turn around from a loss of $83.3m the previous year.

The company said it had reduced its debt to $100m, which was a huge improvement over its toughest days in 2009 when debt stood at $503m.

The appliances business was being affected by difficult trading conditions and losses from foreign exchange hedges. First-half earnings for this division would be at, or slightly above, break even.

"In the first quarter, the benefits of a rapidly appreciating Australian dollar against the US dollar were favourable to input costs, however these benefits were more than offset by the company’s hedging losses. This represents a one-off loss of earnings in the first quarter," Turner said.

The company was progressively reverting to a previous transactional hedging policy which would be more responsive to currency movements but hedging contracts would continue to incur losses.

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