F&P whiteware prices set to rise

Fisher & Paykel Appliances is increasing its prices here and across the Tasman - which combined, account for three-quarters of sales - to counter surging steel and plastic costs.

Spokesman Brian Nowell said prices in New Zealand would increase by between 5 per cent to 7 per cent from April 1.

In Australia, prices on some appliances would be raised over a staggered timeframe.

The country's biggest home-appliance maker, which makes DishDrawer dishwashers and SmartDrive washing machines, deferred increasing prices in its biggest market of Australia last year because of competition from lower-cost producers such as Haier Group, LG Electronics and Samsung Electronics.

"We will give Australia a go and get out of it what we can," Nowell said.

Shares in F&P Appliances have fallen 28 per cent this year, the worst performance on the NZSX50 index. However, they closed last night up 2c at $3.12.

Last month, the company cut its 2005 profit forecast a fourth time, citing higher steel and plastic costs and increased rivalry.

On February 2, the company issued a profit warning, saying it now expects a full-year net profit of between $63 million and $68 million. This compares with the $75 million to $78 million previously forecast.

The Nihon Keizai newspaper reported yesterday that Japanese steelmakers would increase prices of steel sold to manufacturers by as much as 20 per cent to help absorb higher costs of raw materials.

Present prices, which were set in October, would increase from April.

Crude oil, which yields chemicals for making plastics, cost US$53.93 a barrel in New York, 47 per cent higher than a year ago.

Nowell said F&P had no plans to increase prices in its other international markets after the 5 per cent rise in January. The company raised some prices in New Zealand last August, although not as much as the 5 per cent targeted.

Earlier this month, F&P said it had secured an exclusive distribution deal with Noel Leeming which would see its appliances supplant all other brands except US alliance partner Whirlpool in the retail chain's 45 stores from late next month.

F&P managing director John Bongard said then the manufacturer had been left "a little short" when Harvey Norman pulled out of an exclusive deal last year.

It had also been hurt by the focus of its largest retailer, Farmers, on higher margin goods such as cosmetics and jewellery after a change of ownership.

The blows suffered to distribution had pushed F&P's market share below its 55 per cent to 60 per cent target in recent months.

Other recent announcements include an extension to the Whirlpool strategic alliance announced in August 2003.

Steel surge

Steel prices have jumped over the past two years because of tight raw materials supplies and a surge in demand, mainly due to China's growing economy.

The price of a ton of hot-rolled coil steel in the US hit US$482 this month, up 66 per cent from the recent low set in June.

Information gathered from major steel product markets in 22 Chinese cities shows steel prices rose by at least 1000 yuan (US$121) a tonne in the past year ended early March.

www.fisherandpaykel.co.nz