Eroding margins in New Zealand and Australia would probably reduce Fisher & Paykel Appliances’ profit in the year to next March, shareholders in Auckland were told yesterday.
But revenue should increase, driven by higher sales in the United States.
“Increases in costs – in particular for steel, plastics, copper, and other raw materials have adversely impacted margins,” chief executive John Bongard said at the company’s annual meeting.
Net profit after tax would be about $80 million in 2005, less than the $85.3 million posted in the year to March, he said. On the news the company’s shares tumbled 27 cents yesterday to $4.41.
The $80 million is less than the company forecast when it announced its full-year profit in May. At the time, it said it expected the profit to be in line with the $85.3 million it had just announced.
There were signs of some weakening in the Australian market because of competition, as well as the dry autumn and winter across New Zealand, Mr Bongard said.
Sales of driers had been particularly affected. Price increases planned for October 1 were also expected to dampen demand.
But the appliance whiteware manufacturer expected better total sales, driven by growth in the US, Mr Bongard said.
Total sales in the latest March year were up 12.4 per cent to $938.7 million.
Fisher & Paykel formed an alliance this year with Whirlpool Corporation, the world’s biggest appliance manufacturer. Under the agreement, Whirlpool would distribute the New Zealand brand in Britain and Fisher & Paykel would distribute the US brand in New Zealand.
Fisher & Paykel also has an agreement to supply appliances to American home improvement chain Lowe’s, which has almost 1000 stores.
It was hard to predict how long it would take to improve the company’s prospects in New Zealand and Australia, Mr Bongard said.
From Stuff Dot Co NZ
