Fisher & Paykel Appliances Holdings Ltd. (FPA.NZ) is “very closely” watching its Asian competitors with fair trade issues in mind as it attempts once again to raise its product prices, Chief Executive John Bongard said.
The New Zealand-based home appliance maker wants to lift its prices by 5% in Australia and in its home country on April 1 to counter soaring raw material costs and a strengthening New Zealand dollar against its Australian and U.S. counterparts.
But a similar move late last year largely failed because it wasn’t matched by the company’s Asian competitors.
Bongard said he is “very carefully” watching competitors to ensure they aren’t dumping appliances into the Australian market as Fisher & Paykel Appliances tries again to raise its prices.
“All manufacturers all over the world have had to put up with the same huge price increases in raw materials as we have,” Bongard told Dow Jones Newswires in an interview Wednesday.
“We find it difficult to understand how some of our Asian competitors have managed to absorb that total cost without passing it on,” he added.
Bongard was unwilling to say that he thinks competitors are guilty of dumping appliances because his company hasn’t yet taken any public action alleging that, which he described as an “arduous and expensive” process.
Fisher & Paykel Appliances has previously won a dumping claim against its competitors.
In September last year Australian Customs found that machines exported to that country by South Korea’s LG Electronics, Inc. (066570.SE) were being dumped, while Daewoo Electronics Co. (QD.DWE), Samsung Electronics (005930.SE) and other exporters had earlier also been found to be dumping their goods.
Fisher & Paykel Appliances’ latest price rise comes a month after it downgraded its full-year earnings forecast partly because low priced imports from China and Thailand frustrated the acceptance of its October price rise.
Bongard said he is “just going to have to persevere” in Australia, and is hopeful that the fresh attempt to lift prices will yield better results.
Fisher & Paykel Appliances’ share price has tumbled 27% this year as investors sell the stock on concerns about rising raw material prices and a strong New Zealand dollar.
At around 0045 GMT the company’s shares were trading down 2.5% at NZ$3.12, and many brokerages have Hold or Neutral ratings on the stock partly because they don’t see any short-term relief in sight from high raw material costs or currency pressures.
Bongard said raw material costs are “still edging up”, and added that the Reserve Bank of New Zealand’s decision last week to raise the Official Cash Rate by 25 basis points to 6.75% was “pretty unhelpful.”
“The (New Zealand) dollar’s already trading in a difficult range for us and that just puts added pressure on us,” Bongard said.
At least one analyst has recently questioned the viability of Fisher & Paykel Appliances’ exclusive dealership arrangements in New Zealand, which involve it signing deals with retailers to sell its products on the condition they don’t sell the products of any of its competitors.
Bongard defended the practice by saying that this month’s signing of local appliance retailing chain Noel Leeming reinforces his view that the exclusive strategy is sustainable.
“We’re quite firm about our preference, and we certainly won’t be the people that decide to break that method of distribution,” Bongard said.
Asked if Fisher & Paykel Appliances is interested in buying the finance business of New Zealand’s Pacific Retail Group Ltd. (PRG.NZ), Bongard said he “would always take a look at these sorts of things.”
But he added that his company’s finance business is focused on combining its existing operation with that of Farmers Finance, which it bought in November 2003.
Pacific Retail Group is considering spinning off its finance division, and said earlier this month that “a number” of potential buyers had shown interest in the business.
From Yahoo, Singapore