Analysts mixed on F&P update

Fisher & Paykel Appliances' market update has been met with a mixed reaction from analysts.

The whiteware manufacturer told shareholders at its annual meeting on Monday that it was within $1 million of its profit targets for the four months to July despite tougher than expected trading conditions in North America.

But that wasn't enough to keep analysts from First NZ Capital or UBS happy and yesterday they both downgraded their recommendations.

First NZ Capital's Greg Main said the lack of dividend payment had been the main reason for its downgrade from buy to neutral although it had maintained its price expectation at 90c.

Main said Fisher & Paykel's news had not all been negative but it had lowered its 2010 financial year forecasts to reflect the risks around North America.

It also appeared that the business was still experiencing teething problems with the transfer of its manufacturing business to Mexico and Thailand causing supply problems in Australia.

Once the restructuring was completed the company would be in a better position and would only need to wait for markets to recover.

"There are a few issues so investors should take a wait and see position."

The half year results in November would likely give a clearer picture of the business.

UBS also downgraded Fisher & Paykel from neutral to sell.

But Macquarie and Forsyth Barr both upgraded the company to outperform. In a note Macquarie analyst Brooke Bone cited the potential of the China market as a reason for the upgrade as well as resolution of the company's financial needs.

Meanwhile, the sale of Fisher & Paykel's East Tamaki site to property syndicate Direct Property is taking longer than expected.

The company announced the sale in early June but said it was conditional on finance.

It was expected to go unconditional by the end of this month but Fisher & Paykel head of investor relations Paul Brockett said Direct Property had asked for more time and the date had been extended to next month.

The 14.4ha is expected to be worth around $70 million and analysts have previously said it is key to helping the business pay off a $235 million debt amortising facility arranged with its banks as part of its capital restructure.

The facility must be paid back in full by April.

Fisher & Paykel's share price closed down 1c to 79c yesterday.