KEY POINTS:
Fisher & Paykel Appliances expects a boost in earnings in its second-half results, despite subdued demand globally for whiteware.
While the global economic climate meant the outlook remained uncertain, the company said the expected decline in raw material pricing, and cost savings from the relocation of its factories,
would improve its next half-yearly bottom line.
It yesterday reported a $7.3 million loss for the six months to September 30, after incurring one-off after-tax costs of $29.7 million for its factory relocations.
If expenses from the shifting of factories to Mexico and Thailand were excluded, profit after tax would be $22.4 million - ahead of analysts' expectations of $16.1 million.
Before one-off items, normalised group operating profit before interest and tax was $44.8 million, down 20.4 per cent on the previous corresponding period.
Chief executive John Bongard said it was a "pleasing" result, given the difficult trading conditions the company had endured over the past two to three years.
Total revenue increased 0.6 per cent to $697.1 million.
The Australian whiteware market was the standout, with sales rising 12 per cent to $233.8 million. Increased sales in Australia helped to offset declines in New Zealand, North America and other markets such as Europe and Asia.
But increased costs for raw materials, combined with the volatile exchange rate and stiff competition, saw its operating margin decline to 5.3 per cent.
Revenue was also boosted by an improvement in its finance arm's takings from $59.3 million to $68.3 million.
Bongard said October whiteware sales were "not encouraging" - some of it attributable to elections in the US and New Zealand - but three days after the elections here, there were signs of a "flicker back". He expected November to be better than expected, but Christmas sales were difficult to forecast.
In the US, the company had not been involved in the "the deep and dirty discounting" at the bottom end of the market, so had not been as affected as much as some of its competitors, he said.
But the overall outlook remained uncertain. The New Zealand market was expected to remain soft, growth in Australia was likely to slow, and North America and Europe were likely to continue declining.
Profitability, however, was likely to improve with the expected decline in the cost of raw materials such as steel, copper and oil-based plastics, and the cost-savings from factory relocations, which were on track.
A dividend of 5c a share was declared, down from 9c previously. Shares closed at $1.32, down 5c.
FISHER & PAYKEL APPLIANCES
* Six months to September 30.
* Revenue $697.1m.
* Net profit after tax ($7.3m).
* Final dividend 5cps.
