Fisher & Paykel Appliances’ net profit for the year has almost halved, down from $33.8 million to $18.0 million.
Despite the profit drop, which was within the company's guidance range of $16-$23 million, the business did pick up in the second half of the year with an operating profit before interest and tax of $23.7 million, compared to $5.7 million in the first half.
The company reported an after tax loss after impairments and other one-off items of $83.3 million, compared to a $95.3 million loss in the previous year.
F&P Appliances’ total impairments and fair valuation adjustments for the full financial year, which included impairment charges foreshadowed earlier this month, amounted to $102.3 million before tax.
Other one-off before-tax items included redundancy costs of $8.3 million, debt restructuring costs of $11.1 million and profit on the sale of land and buildings in East Tamaki of $3.9 million.
As expected, the company’s finance business had a strong year, with operating earnings up 37% to $28.9 million in the year ending March, due to higher net margins, overhead containment and a focus on asset quality and credit management.
The company has also worked through the one-off costs of its global manufacturing strategy, which dropped to $0.4 million in the second half after reaching $15 million in the first and well down on the $66.6 million spent in 2009.
The slow performance of the whiteware division was the main drag on the company’s result, with its full year operating profit before interest and tax falling 47% to $29.4 million.
But the manufacturer remains confident about the appliances business, saying that while there were still difficult trading conditions in the US, there was still a second half recovery driven by financial benefits arising from the global manufacturing strategy and market share gains in Australia.
It said it made those Australian gains through continuity of supply, increased marketing and price rebalancing as a result of a stronger Australian dollar.
While the US market remains uncertain, F&P Appliances expanded US distribution into Sears Hometown stores in November, with its DishDrawer moving into Sears Full Line stores from next month.
The partnership with Haier group also saw the opening of the first Fisher & Paykel showroom in Hangzhou, China this month and the agreement ti distribute Haier products in Australia is also expected to fuel growth,
Managing director and chief executive Stuart Broadhurst said the “challenges and distractions” associated with shifting manufacturing locations were now firmly behind the company, but that demand conditions are expected to remain fragile.
The benefits of a lower manufacturing cost base are likely to be partially offset by competitor activity, rising commodity prices, increasing sea freight charges and lease costs, while the company also warned that labour costs will also increase in following the removal of the 5% salary reduction for salaried employees.
The directors have declined to issue any profit guidance for the coming year, although a trading update will be provided in August.
Fri, 28 May 2010