F&P Appliances in supply deal with Haier

File photo

Fisher & Paykel Appliances Holdings, the struggling whiteware manufacturer, has signed an agreement to supply parts to cornerstone shareholder Haier of China.

F&P Appliances will earn between $20 million and $35 million a year by selling components and technology, mainly motors, to 20% shareholder Haier for at least three years.

The deal is expected to cost the whiteware manufacturer some $25 million in capital investment, and can be renewed for as long as a further seven years.
The deal is subject to shareholder approval, as it involves a related party, unless the NZX watchdog waives that requirement.

The Chinese company injected much-needed equity in F&P Appliances as part of a $200 million rights issue in 2009 when the New Zealand company was forced to raise funds to repay bank debt. Since then, the local company has taken over distribution of Haier products in Australia.

F&P Appliances downgraded full-year profit expectations after ongoing weakness in consumer demand, as households continue to pay down mortgages rather than ramping up debt.

Last month, former Meridian Energy chief executive Keith Turner took over as F&P Appliances chair after stand-in Ralph Waters stepped down. Waters was filling after Gary Paykel retired in November 2009.

The shares were unchanged at 57 cents on Friday, and have gained 1.8 per cent this year.