Door shuts on tipped F & P profit

By Yoke Har Lee

Problems with a refrigerator door led whiteware manufacturer Fisher & Paykel Industries to warn shareholders profits may not be what they expect in the year to March 31.

The company was forced to close for four weeks in February to make modifications to the production line for its Active Smart refrigerators.

But chief executive Gary Paykel pointed yesterday to continued underlying strength for the company's business. He said profit before abnormals would match 1998 levels. By the 2000 financial year, profits would be much better.

"There are already signs that steps the whiteware group is taking will see a return to more acceptable levels of profit in the new financial year."

For the financial year ended March 1998, the group had profits, excluding abnormals, of $36.2 million. Analysts polled by the Estimates Directory had profits forecast at $38.7 million for the March 1999 year end.

Richard Blundell, corporate affairs manager for F&P, told the Herald that March came in as the best sales month for the company in the last five years for whitegoods in New Zealand, while Australia saw its second best month ever. In both of these cases, the Active Smart refrigerators were the top sellers.

The profit outlook was a "strong positive statement" given the "several million dollars" in costs associated with the start-up of the Active Smart fridge production.

Production of the new fridge saw teething troubles late last year.

But analysts said they were not unduly worried about the problems encountered with the fridge door.

David Errington, industrial analyst for Merrill Lynch, based in Australia, said: "The announcement was really quite irrelevant. I am not hung up by short-term profit numbers. What F&P has to do is to realise that they have got good products. Their problem is in getting these products out to the market, focusing on the manufacturing and distribution."

F&P has recently opened its a plant making dishwashers in Dunedin. About $35 million is being spent on the development of DishDrawer, including plant costs.

The company shipped 3000 units to the United States in December and has its product at more than 400 US retailers.