Whirlpool profit slump weighs on F&P Appliances stock

Tuesday 10th February 2009

Shares of Fisher & Paykel Appliances sank to a record low after distribution and technology partner Whirlpool Corp. posted a fourth-quarter profit slump, highlighting the drop in demand for household items.

Whirlpool's earnings fell to US$44 million in the latest quarter from US$187 million a year earlier as sales tumbled 19%. Chief executive Jeff Fettig said the "severity and scope of the global economic downturn has significantly increased over the last several months and had a significant impact on consumer demand in all parts of the world."

Auckland-based F&P Appliances entered a global alliance with Whirlpool in 2003, licensing products such as the DishDrawer, gaining reciprocal distribution agreements and supplying parts to the world's biggest maker of home appliances. F&P Appliances stock fell 1.7% to NZ$1.13, the lowest since it was split from the healthcare business in 2001.

Appliances are "one step down from the auto industry for the household wallet," said Paul Richardson, who helps oversee NZ$150 million at BT Funds Management. "It's not an easy industry to work in, selling quite expensive consumer products."

New Zealand's largest home appliances manufacturer posted a first-half loss of NZ$7.3 million, reflecting costs to relocate factories overseas and waning sales in the U.S. and at home.

Moving plants to lower-cost nations or nearer to markets was part of the company's 'Global Manufacturing Strategy,' part of a strategy to curb costs in the face of a soaring New Zealand dollar and higher costs of raw materials. Since then, the kiwi has plummeted and slowing demand in China has eroded prices of raw materials.

Whirlpool stock gained 0.7% to US$37.13 on the New York Stock Exchange and is down 25% in the past month. Its biggest rival, Electrolux, this month posted a fourth quarter loss of 389 million Swedish crowns and said it expects the impact of the global downturn to spread in 2009. Its shares are up 16% in the past week as the loss was smaller than some analysts had expected.

By Jonathan Underhill

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