US revenue gains balance F&P profit drop

A big jump in United States revenue yesterday eclipsed news of a 24 per cent profit drop at Fisher & Paykel Appliances.

Shares in the company rose 8c to $3.29.

Chief executive John Bongard said the US was now the company's No 1 market by revenue.

US revenue was $198 million for the six months - up from $89.5 million in the same period last year.

Those figures included revenue from Dynamic Cooking Systems - a company F&P bought for $49 million last October.

Dynamic was unprofitable when bought but Bongard said the US team had done a fantastic job of turning it around.

Staff had been reduced, cost savings made around distribution and investments in the factory had improved efficiency. "It's been quite a success story."

Dynamic makes luxury self-cleaning ovens and giant barbecues that retail for about US$8000 ($11,600).

The continued impact of the high dollar and rising raw material costs were to blame for the profit drop - eroding operating profit by $3.1 million and $7 million respectively.

That fall was signalled with downgrades earlier in the year and the net profit was in line with broker expectations.

After-tax earnings for the full year to March 2006 would be between $63 million and $66 million - down on last year's $68.6 million, directors said.

While any easing of the kiwi would be welcome, Bongard said he had given up waiting for it to fall. The company was now working on the basis that it might stay around present levels.

Increased raw material costs were driven by continued Chinese demand for commodities such as steel.

Sales in last year's leading market, Australia, fell to $167.2 million from $183.4 million.

That reflected a price increase that had briefly affected sales volumes.

Bongard said sales had now returned to "normal".

There was also a softening in the Australian market with less consumer spending and a drop in new home building.

Bongard said that despite the increasing focus on the US, the company was still committed to Australasia and would continue to maintain a manufacturing and R&D base in New Zealand. However, it was likely that manufacturing capacity in the US would be increased at some point.

Europe - where first half sales rose 20 per cent to $7.7 million - was the company's next target.