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Fisher & Paykel Appliances Posts Robust Sales
May 20, 2004
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New Zealand-based appliance maker Fisher & Paykel Appliances Holdings Ltd. reported a strong full-year net profit due to robust sales.

The company also forecast a similar profit for the current financial year, despite expectations for a possible softening of sales in the Australasian market.

The company's full-year net profit ended March 31 rose 16 percent to NZ$85.3 million (approx. U.S. $41.5 million) compared with NZ$73.5 million a year ago. The number met the company's own top-end forecast range.

"We've had strong sales in the appliances division, with unit sales rising strongly," Managing Director John Bongard said.

Full-year appliances sales rose 9.3 percent to NZ$852.7 million, compared with NZ$780 million in the year-ago period, underpinned by unit sales rising 17.8 percent to 1.19 million in the year.

Appliances earnings before interest and tax rose 11.8 percent to NZ$102.1 million from NZ$91.3 million in the previous year, which helped lift group EBIT by 20 percent to NZ$130 million compared with NZ$108.6 million the previous year.

The stronger net profit was also helped by the acquisition of the Farmers Finance business in October last year, which boosted operating profit in the company's finance division.

Shares of F&P Appliances, however, fell 2.6 percent after the earnings results, which brokers said partly reflected a strong gains of recent weeks.

Grant Taylor, a senior broker at Citigroup, said that while the result was good, some investors may have been disappointed by the postponement of the company's NZ$85 million share buyback plan. "That's probably the only disappointing thing about the result," Mr. Taylor said.

Mr. Bongard said the board's decision to defer the buyback "reflected the limited liquidity of the company's shares."

Commenting on the outlook, Mr. Bongard said the company expects its current full-year net profit ending March 31, 2005 to match the previous year's NZ$85.3 million.

He said sales in both New Zealand and Australia could ease, due to a slowdown in economic growth in the two countries. "We do, however, expect that a reduction in sales would be offset by growth in the U.S. and Europe," he added.

Higher steel prices would put a leash on costs, but Mr. Bongard said the company hopes that enough volume growth would help to meet its earnings forecast for the current year.

Mr. Bongard believes the company should start to benefit from recent distribution deals with Whirlpool Corp. and U.S. home improvement chain Lowe's Cos. In March, the company signed an agreement with Whirlpool for the latter to sell Fisher & Paykel's DishDrawer brand dishwashers in the U.S. In April, it secured a deal to supply its appliances to Lowe's, which it said could increase distribution of its products in the U.S. by around 50 percent.

These deals should support appliances sales in the U.S., which grew 38 percent in the full year just ended to 149,600 units, Mr. Bongard said. (Dow Jones)

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