KEY POINTS:
Record half-year sales weren't enough to increase net profit at Fisher & Paykel Appliances, but the whiteware maker settled market nerves yesterday by saying it would hit its full-year forecast.
Revenue for the six months ending September 30 was up 22.2 per cent to $696.7 million, compared to $569.9 million last year, while operating profit before interest, tax and restructuring costs was up 19.9 per cent at $54.2 million.
Chief executive John Bongard said he was reasonably pleased with the result achieved despite unfavourable currency movements and high raw material prices and interest rates.
However, restructuring costs of $3.1 million, plus interest of $10 million - following the purchase of Italian stove maker Elba - helped drop net profit 2.3 per cent to $25.6 million.
Bongard reasserted a full-year after-tax profit forecast towards the lower end of a $75 million to $80 million range - before restructuring costs and profit from selling surplus land.
"We don't see any improvement in the exchange rate. I'm sick and tired of actually dreaming about it," he said.
"And if you add to that there is still that uncertainty in the raw material market ... the first half finished a little better than we thought but we felt on balance it was best to leave the guidance where it was."
The market reacted positively to the result with shares closing up 26c yesterday at $4.00.
Goldman Sachs JBWere analyst Rodney Deacon said the result was probably in line with estimates and the outlook had settled some market nerves about the rest of the year.
"I think the reason [for] the positive share market reaction today is purely that they have reaffirmed the guidance for the full year, which I think some people had thought they might actually downgrade," Deacon said.
More than 90 per cent of net exposures against the Australian dollar for the second half had been hedged at an average rate of 85.6c compared to an actual average rate in the first half of 87.9c.
However, unspecified restructuring costs would be incurred in the second half, while interest would be of a similar level.
Product price increases had been completed for the time being, while the company kept watch on costs.
Chairman Gary Paykel said ongoing cost reductions - valued in the tens of million on an annualised basis - had helped protect against the higher material costs.
Synergies between the firm's three cooking facilities in Italy, US and New Zealand would also be realised during the next 12 to 18 months.
Elba - bought in June for $158 million - contributed $4 million to operating profit in line with expectations and provided significantly increased distribution within Europe, Paykel said.
