F & P Appliances boss Bongard resigns

Fisher and Paykel chief executive John Bongard. Photo / Richard Robinson

Fisher & Paykel Appliances shareholders have been told at their annual meeting today that chief executive John Bongard will be leaving the company at the end of the year.

Bongard has been chief executive since 2004 and will have been with the company 36 years when he leaves. Bongard has been treated for prostate cancer.

An international search will be undertaken for his replacement.

The company outlined 'exciting opportunities' with new Chinese shareholder Haier while acknowledging tough trading in North America.

F&P Appliances celebrated its 75th anniversary in 2009 in turbulent economic times.

The company also announced the appointment of Simon Botherway as a director. He will be an independent director. Botherway is a well known fund manager and is the former chairman of Brook Asset Management.

At the annual meeting chairman Gary Paykel acknowledged the recent death of Lady Joyce Fisher, wife of the company's late co-founder Sir Woolf Fisher .

This year the company has raised new capital, acquired Haier as a 20 per cent cornerstone shareholder and is selling assets to pay down debt.

Paykel said the company had the right plans in place and would come through the recession a stronger organisation.

During the capital raising the company predicted normalised group earnings before interest and tax of $87.7 million for the 2010 financial year and a normalised net profit after tax of $32.8m in prospective financial information (PFI).

Chief executive John Bongard said today that in the four months to date the company had met the PFI revenue targets but sales in North America had been lower than expected.

"As at the end of July, appliances was behind on year-to-date PFI normalised Ebit due to margin pressure and increased product costs in the US," he said.

The finance business had started the year strongly and year-to-date it was above PFI normalised Ebit, he said.

"Overall the company is within approximately $1m of the group normalised net profit after tax as forecasted in the PFI."

Net debt levels at July 31, 2009, were $308m, which is approximately $30m better than the PFI target.

The company is not allowed to pay dividends until a $235m debt facility is repaid so a dividend is not expected to be paid in the 2010 financial year.

The North American market continued to be severely affected by the global slowdown and trading conditions were extremely difficult, Mr Bongard said.

"Overall, the market decline calendar year-to-date is in the vicinity of 15 and 20 per cent depending on the product category," Mr Bongard said in comment on the North American market.

Management was highly focused on reducing operating costs in North America as profitability there had been lower than expected.

The company's Elba brand is now being sold exclusively through Sears Outlet stores.

Commentaries have been positive about the US economy but the company remained guarded as to any form of recovery there in the near future.

F&P Appliances is positive about China.

Bongard said the possibility of F&P Appliances supplying production machinery to Haier was being investigated.

Haier had also undertaken to promote, distribute and service the F&P Appliances brand offering into the Chinese domestic market, which continued to grow at a spectacular rate.

Initially 30 models would be introduced to the Chinese market with first shipments expected by September.

"Without a partner of such high status as Haier a successful entry into the Chinese market would be almost impossible for F&P Appliances," Bongard said.

- NZPA