Fisher & Paykel Appliance Holdings

By Dan Stratful

Thursday 8th March 2012

The unfortunate thing about Fisher & Paykel Appliance Holdings (NZX: FPA ) is its Finance division is now outperforming its core Appliances division, the very foundations the company was built on.

This is due to FPA reporting extremely tough trading conditions in the Appliances division while the Finance division has thrived and performed well, while its investors benefitted from The Crown’s Retail Deposit Guarantee Scheme until the end of 2011.

FPA’s interim results to 30 September 2011 showed very little improvement in Appliance trading conditions as reported net profit fell to $1 million from $11 million, as the Appliances business reported a loss before interest and tax.

The Finance business reported another strong interim period, but experienced higher financing costs associated with retail debentures and bank facilities.

FPA’s operating revenue for the interim period fell to $514 million from $550 million, showing that even its top line is falling.

For the year ending 31 March 2012 FPA expects normalised operating earnings before interest and tax to be around $42 million, comprising Appliances at around $10 million and Finance at around $32 million - the Finance division once again contributing most of group earnings.

Investor’s patience in the company may be wearing thin, and the lack of any dividend payments is another negative. Short term impatient investors might consider SELLING FPA and moving into something else with a more buoyant outlook, as long term investor’s HOLD for a potential long term recovery.

FPA’s shares today traded at 43c

For portfolio, sharemarket and fixed income enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge.

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