Fisher & Paykel Appliances Holdings Limited reported a group net profit after tax of NZ$11.3 million for the six months ending 30 September 2010, compared to a NZ$82.4 million loss during the first six months of 2009.
"In spite of weaker market demand and increased cost pressures, the Appliances business increased its earnings before interest and tax by 18% to $6.8 million relative to last year through operational improvements and foreign exchange effects," said Managing Director and Chief Executive Stuart Broadhurst.
"Overall weaker demand in the markets in which we operate and foreign exchange movements contributed to Appliances’ revenue declining by 8% to NZ$478 million” said Broadhurst. “In local currencies, sales were down 1% in North America and 9% in New Zealand while in Australia they were up 5%. The sale of Haier products in New Zealand and Australia is progressing well, however Fisher & Paykel branded product sales in China have yet to commence.
“We lifted our gross margin on these lower sales by 4% to $139.1 million through benefits accruing from our global manufacturing strategy and favorable foreign exchange movements, which more than offset higher raw materials, sea freight, and labor charges."
Broadhurst said the company has increased its investment in product development, and he made note of F&P's development agreement with Whirlpool Corp. and Whirlpool's compressor business, Embraco. In September, the F&P, Embraco, and Whirlpool announced a jointly developed compressor combining linear technology with variable capacity, eliminating the need for lubricating oil.
MOTORS FOR HAIER
Chinese consumer electronics and appliances OEM Haier bought a stake in F&P in 2009. Broadhurst said Haier has begun sourcing motors from F&P for Haier direct drive washing machines. F&P was a pioneer in direct drive washer motors when it developed the SmartDrive motor in the early 1990s.
Group revenues for the first half of 2010 were down 6% to NZ$549.9 million. The group reported no abnormal costs or asset impairments, compared to NZ$107 million for the same period last year. The group includes two divisions: the global Appliances business and the Finance division, which operates only in New Zealand.
“Our balance sheet position has strengthened, however appliance market conditions remain challenging” said Broadhurst. “The Finance Group produced an outstanding performance, increasing its earnings before interest and tax to the overall result by 52% to NZ$18.9 million.”
FULL-YEAR 2010 EXPECTATIONS
F&P expects market conditions to remain challenging and unpredictable in the near term, and the company lowered its estimate of full-year 2010 earnings before interest and tax from NZ$78 million, as announced at the F&P 2010 Annual Shareholders Meeting, to between NZ$63 million and NZ$70 million.
Full year earnings before interest and tax for the Appliances business are now estimated to be between NZ$28 million to NZ$35 million.
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