Fisher and Paykel to split off healthcare by end of year

By ELLEN READ manufacturing writer

Fisher and Paykel plans to complete the separation of its healthcare and appliance divisions, and the subsequent US Healthcare share offer, by year's end.

The company has been under pressure to spin off its high-performing healthcare business from its sluggish whiteware division.

Chief executive Gary Paykel - who yesterday announced an annual profit hit by foreign exchange losses - confirmed the separation was on track but was unable to give details about the planned Nasdaq listing.

Under plans released in December, F&P said it would float 20 per cent of the separated Healthcare company on the Nasdaq via a public offering.

Mr Paykel said yesterday that shareholders were expected to vote on the proposed separation in late September or early October. A 75 per cent approval rate is needed.

The scheme has attracted criticism, with some analysts saying it will delay the separation process, that ongoing compliance costs will be high and that the company will be swamped by the huge American market.

Yesterday's separation update came alongside the announcement of a net profit after tax and abnormals of $11.04 million for the year to March 31. The result was 80 per cent down on the $54.4 million reported last year.

Fisher and Paykel said the result was hit by a non-cash provision for unrealised foreign exchange losses.

"All foreign currency instruments have been marked to market as at 31 March, 2001. This involves a non-cash provision for unrealised losses on foreign currency instruments of $64.2 million," the company said.

In future, foreign currency gains or losses will be reported separately from trading profits.

F&P's after-tax profit, before abnormals, was $60.3 million, up from $54.4 million in the previous year.

On the forex losses, Mr Paykel said the company had received the wrong advice from longstanding advisers.

He said the existing forex cover would run out around November next year. If the New Zealand dollar recovered as predicted before that then the losses could be recouped.

A final, fully imputed dividend of 18c a share was declared, bringing the total dividend for the year to 30c, a 20 per cent increase. The final dividend will be paid on June 29.

The reduced bottom line saw basic earnings per share dip to 9c from 46c the previous year.

As expected, the healthcare division reported an improved performance while the appliance operations continued to flounder.

Healthcare's operating profit before tax grew 30 per cent to $66.6 million while the appliance operating profit before tax fell 19 per cent to $31.3 million.

The appliance division's profit reduction in the second half was much less marked at 8 per cent, reflecting measures being taken to overcome the adverse impacts of price competition and currency, the company said.

These include the successful pursuit of an anti-dumping case against importers of Korean fridges and washing Machines. Commerce Minister Paul Swain has imposed interim anti-dumping duties and a final verdict is due by Sunday.

F&P also announced that it would, within 12 months, dispose of its investment in independent retailer Hill & Stewart.

"Our investment in retailers has never been part of our core business but one of providing transitional short-term support," it said.

The F&P directors expect a continued improvement in operating profit for the period until separation.

F&P shares shrugged off the forex losses to concentrate on the separation progress, closing 50c higher at $10.45 yesterday.