F&PA climbs despite cost rises

By GEORGINA BOND


Shares in Fisher & Paykel Appliances shot up 13 cents yesterday to $4.30, despite the company downgrading its full-year profits because of raw material costs.

The company yesterday reported a net profit of $34.5 million for the six months to September, slightly below its result of $34.9 million at the same time last year.

Chief executive John Bongard said global sales were strong during the half, but the company had seen an expected slowing in its Australasian home markets.

The results came amid a competitive climate. Bongard said the company was facing the "incredible" price hikes for steel and plastic that were hitting manufacturers worldwide.

It was expected this would cause some short-term erosion in profits and the company said it would follow up its recent price increases in Australasia with those in the US and other global markets from December 1.

This, combined with currency volatility - which eroded pre-tax profits by $2.7 million this half - made forecasting difficult. Bongard indicated full-year net profits would be in the range of $75 million to $78 million, down from $83.5 million last year.

The sharemarket reacted positively to a dual announcement of a new agreement with global appliance manufacturer Whirlpool to supply it with components for an initial five-year period.

Bongard said the agreement required capital investment of about $25 million and he expected it would generate revenue of $35 million to $40 million in the medium term.

Its year-old Farmers Finance acquisition contributed to a significantly better result for the finance division of $60.6 million, up from $22.3 million in the first half last year. A fully tax-paid interim dividend of 9 cents per share will be paid on December 8, up from 8.8 cents at this time last year.