Fisher & Paykel Appliances Holdings Ltd., New Zealand’s largest home appliance maker, may report first- half earnings stalled because of rising costs of raw materials such as steel and plastics.
The Auckland-based company tomorrow may post net income for the six months ended Sept. 30 of NZ$34.9 million ($24 million), unchanged from a year earlier, according to the median estimate of seven analysts in a Bloomberg News survey. Forecasts ranged from NZ$28.7 million to NZ$37 million.
Seven of eight analysts in a Thomson Financial survey have cut their forecasts for Fisher & Paykel’s 2005 profit the past month amid higher costs to make the company’s DishDrawer dishwashers and SmartDrive washing machines. Rivalry in Australia and New Zealand, where Fisher & Paykel makes three quarters of its appliance sales, is limiting its ability to raise prices.
“Rising raw material costs (and) aggressive competition in both New Zealand and Australia from Asian importers” will constrain earnings, Dwane Clark, an analyst at First NZ Capital in Wellington, said in a report e-mailed to Bloomberg.
Shares in Fisher & Paykel were unchanged at NZ$4.17 at the 5 p.m. close of trading in Wellington. The stock has gained 8.6 percent this year, lagging an 18 percent gain in New Zealand’s benchmark stock index.
The market price of hot-rolled steel sheet, the industry benchmark product, more than doubled in the three months ended Sept. 30 to an average of $704 a ton from $273 a year earlier, and rose 17 percent from the second quarter’s $601, according to PurchasingData.com, which tracks metal prices.
Higher Costs
Crude oil, which yields chemicals for making plastics, cost an average $43.89 a barrel in the same three month period, compared with $30.21 a barrel a year earlier.
Chief Executive John Bongard is expanding sales in the U.S. to reduce his reliance on Australia and New Zealand. Bongard is increasing capacity at his Dunedin factory to meet demand for his dishwashers in the U.S. after striking accords with Lowe’s Cos., the world’s second-largest home-improvement chain, and Whirlpool Corp., the largest U.S. appliance maker.
Last month, Bongard bought U.S.-based Dynamic Cooking Systems Inc., which makes and sells its cooking appliances to about 1,200 retailers in the U.S.
Still, he said the purchase will probably cut 2005 earnings by NZ$1.9 million to about NZ$78 million. Fisher & Paykel had net income of NZ$85.3 million in 2004.
Of six analysts tracked by Bloomberg, four rate the stock a “hold” and two a “buy”
From Bloomberg