Market keen to see F&P developing in China

Fisher and Paykel appliances. Photo / Glenn Jeffrey

The market will be looking for strong guidance on the progress of Fisher & Paykel Appliances' partnership with China's Haier when the New Zealand company reports its full-year result on Friday, a commentator says.

The Chinese appliance giant snapped up a 20 per cent stake in the whiteware manufacturer two years ago. Medical technology manufacturer Fisher & Paykel Healthcare also announces its annual result this week.

Market commentator Arthur Lim says F&P Appliances should be capitalising on China's construction boom through Haier, which is responsible for its sales in that country.

The World Bank estimated in 2006 that between that year and 2015 around half of the world's construction would take place in China.

In March Haier's Asia-Pacific president, Philip Carmichael, said that hundreds of Chinese kitchens had been fitted out with F&P products since the New Zealand firm opened its flagship store in Hangzhou, near Shanghai, last May.

The Manukau-based company's strategy in China is to fit out newly built apartment blocks with its appliances. "If they are not [capitalising on the construction boom] at this stage, when are they going to capitalise on it?" Lim said.

Forsyth Barr analyst Andrew Harvey-Green said he was estimating F&P Appliances' full-year group earnings before interest and tax (ebit) to be $54 million, just above the Bloomberg estimate of $52 million.

The whiteware maker, which reported an after-tax loss of $83.3 million in its last financial year, has been facing a difficult trading environment in markets such as New Zealand and Australia, with sluggish consumer demand.

F&P Appliances made two cuts to full-year earnings guidance late last year.

Harvey-Green said the company faced pressure from tough trading conditions and rising raw material costs. "It's hard to see appliance sales picking up to a great extent in the very near future," he said.

F&P Appliances shares closed down 1.5c at 55c yesterday.

Meanwhile, Fisher & Paykel Healthcare will report its full-year result tomorrow. The company was facing headwinds from a strong Kiwi dollar when it reported its half-year result in November.

At that time Fisher & Paykel Healthcare estimated that an average NZ/US exchange rate of US77c would result in a full-year net profit in the range of $48 million to $51 million, after non-deferred tax adjustments.

F&P Healthcare shares closed down 1c at $3.10 yesterday.