F&P shines as profit jumps 194 per cent

By LIBBY MIDDLEBROOK

Fisher & Paykel Industries, a mainstay of New Zealand manufacturing, signalled yesterday that it was finally delivering on its promises.

The country's largest home appliance maker reported an after-tax profit of $54.4 million for the year to March 31, a 194 per cent improvement on last year's $18.5 million.

A market analyst said it was the first time for a number of years that the Auckland-based company, which operates whiteware, finance and healthcare businesses, had actually delivered on its promise.

"It's a nice, clean, quality result. It's one of the first times during the past decade that they've delivered the goods.

"In recent years they've tended to disappoint the market."

Fisher's chief executive, Gary Paykel, said the company's improved performance was largely driven by a two-year restructuring programme, which reduced its 1998-99 result from $35.1 million to $16.6 million as a result of abnormals. There were no abnormals this year.

He called the result terrific, and noted strong sales had been recorded despite a fall in business confidence.

The company's healthcare business had also made strong market share gains in the United States, he said, and its whiteware division was performing well due to increased efficiencies.

The company's new distribution business in regions such as Europe was also minimising operating costs.

"We're really pleased with the result. It has been driven by our restructuring, bringing the company back to healthcare, whiteware and finance, and divesting ourselves of various non-core businesses."

Fisher sold Cellnet and Panasonic in 1998.

It produced an operating surplus before unusual items and tax of $83.6 million, a 59 per cent rise on the previous year's $52.7 million result. Earnings per share were 46c, a 187 per cent improvement on last year's 16c result. In March, the company paid a final dividend of 40c, as part of its new dividend policy, from 33c the previous year.

Sales increased only marginally, by 7.9 per cent to $833.2 million, for the 1999-2000 year from $772.1 million the previous year.

Healthcare was the company's star performer, its turnover for the 12 months rising 21 per cent to $143.3 million from $118.7 million in 1999, largely generated by gains in overseas markets.

Fisher estimates the division's international revenue and earnings will continue to grow at similar levels to the past three years.

Whiteware, which has been a drag on profitability in recent years, produced revenues of $624.7 million, an 18 per cent rise on last year's $529.5 million result, flowing from strong market share in Australia and New Zealand.

Mr Paykel was also pleased with the performance of the finance arm, which generated a 4 per cent rise in revenue to $50.5 million from $48.6 million the previous year.

Net earnings were $6.8 million.

"We expect to better the group profit we've done this year and I'm confident we will do that [through] increased efficiencies, healthcare continuing to grow and increased market share in existing markets."

He would not be drawn into discussion on the company's future as a single listed company.

Fisher said last month that it had hired Deutsche Bank for a strategic review of the company's operations, which includes spinning off its divisions into separate companies.

The review is due to be completed by the end of the year.

Fisher's share price closed up 11c at 689c.