F&P Appliances posts first-half loss of $82 million on US charge; stock slides

Friday 27th November 2009

Fisher & Paykel Appliances, the manufacturer that replaced its chairman yesterday and is searching for a new chief executive, posted a first-half loss on charges against its North American operations and to complete its production overhaul. The stock dropped almost 5%.

The net loss was $82.4 million in the six months ended Sept. 30, from a loss of $7.3 million a year earlier, the Auckland-based company said in a statement today. Sales fell 16% to $584 million.

The whiteware manufacturer strengthened its balance sheet in the past 12 months, selling shares at a deep discount, renegotiating its bank debt and welcoming China’s Haier Group as a new cornerstone investor. While alleviating its debt position, the company still had to contend with the impact of the global economic slump, which sapped earnings from its fridges, washers and ovens.

“U.S. market conditions during the period were especially difficult due to higher levels of competition and the company’s significant exposure to the severely depressed high end of the appliances market,” new chairman Ralph Waters said.

The company cut its forecast for “normalised” full-year profit to a range of $16 million-to-$23 million, from the range it gave in September of $20 million-t0-$23 million. The net full-year result is likely to be a loss of $58 million to $65 million, reflecting the North American charges.

Shares of F&P Appliances tumbled 4.6% to 62 cents on the NZX today and have sunk 33% this year.

Waters said the company has had “a solid start” to the second half, with earnings from appliances close to forecast in October and sales expected to meet forecast this month. The company’s finance arm “continued to perform above expectations in October. “

Waters was tapped as chairman after Gary Paykel, part of one of the founding families of the group, announced he would step down from the position. Waters will oversee key decisions including the appointing of a new CEO after long-serving chief John Bongard retired due to ill health.

F&P Appliances also incurred one-time charges of about $26 million in the first half to complete its Global Manufacturing Strategy, which has involved shifting plants to lower-cost countries and nearer to export markets. The charges also reflect debt restructuring costs and staff cuts.

Cash flow from operations shrank to $17.9 million from $36.8 million a year earlier, excluding the movement of loans to finance unit customers, it said. Net bank debt fell to $264.6 million at Sept. 30 from a peak of $501.7 million at the end of May.

In local currency terms, sales fell 19.5% to $90.2 million in New Zealand. Revenue from Australia, the biggest market by sales, declined 24% to A$145.2 million.

U.S. sales tumbled 31% to US$98.6 million. In Europe, sales fell 8.9% to 24.6 million euros and revenue from the rest of the world declined 7.3% to $32 million.

The company said the development of commercial opportunities with Haier, which gives it a pipeline into China and technology, distribution and manufacturing tie-ups in the rest of the world, “are progressing well,” it said.

F&P Appliances said it expects top progressively open its own showrooms in China starting next month, slightly later than planned.

The company’s finance unit lifted earnings by 7.4% to $12.4 million.

Businesswire.co.nz

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