Margin gains help F & P top forecasts

By DITA DE BONI

Improved whiteware margins spearheaded an increase in profits for Fisher & Paykel Industries in the six months to September 30.

A 51 per cent lift in profit to $24.1 million on sales of $398 million was slightly ahead of analysts' "bullish" forecasts of a bottom-line result of $24 million.

Credit for most of the earnings growth went to whiteware margins, which improved from 3.6 per cent to 5.2 per cent, but they were still dwarfed by the healthcare division's margin of 34.6 per cent.

Whiteware sales to international markets increased 92 per cent to $44.2 million, most of the growth coming from US sales of Quantum products - "SmartDrive" washing machines and the double unit "DishDrawer" dish washer.

The Quantum range of high-end appliances have helped the company to compete internationally against European imports and to maintain its share and margins in the flat Australian and New Zealand appliance markets.

The company has grabbed a 24 per cent market share with the pricey DishDrawer in New Zealand. It aims to sell 20,000 DishDrawers and 12,000 SmartDrives this year in the US, where it has already sold 7500 DishDrawers and 4600 SmartDrives.

As recently as July, the company reported that whiteware was still behind budget, but corporate affairs manager Richard Blundell said the impact of the Quantum premium brand appliances on results had been felt for the first time in the latest six months.

He said the company received a valuable boost when US Associated Volume Buyers picked up the company's products this year to give it more than 400 outlets but even so, the business still had a small base.

"Although [Associated Volume] was the first buying group to support us - and it certainly opens the door - we still have to go to the members and wear out a bit of shoe leather."

Earnings in the healthcare division rose 4.6 per cent to $23.6 million, on sales 16 per cent up at $68.3 million. International sales were $62 million, mainly respiratory humidifiers and products to treat sleep disorders and warm patients.

The third division, finance, increased earnings slightly to $2.5 million, after absorbing a lower loss of $700,000 in Australia.

Asked about an increase in labour costs after the company's first-ever one-day strike in August, and the subsequent 3.25 per cent increase in wages, Mr Blundell said the company had absorbed the cost but had also boosted productivity by placing capital-intensive plant on shifts.

He said yesterday's results would be greeted with "acclamation" by both staff and management, who were all eligible for an undisclosed bonus because of the profit gain.

One analyst said that while the half-year results were "acceptable" whiteware volume to the US would have to increase dramatically to ensure the continued profitability of that business.

"On the positive side, the market can take comfort in the fact that healthcare is continuing the strong performance of the last two halves and is proving to be able to sustain a good level of profit."