Rejig knocks F&P profit

By Yoke Har Lee

Whiteware manufacturer Fisher & Paykel Industries reported a 49 per cent drop to $18.5 million in its bottom-line result for the March year.

But, excluding abnormal items, the trading profit for its ongoing businesses improved 15.2 per cent.

Its margin on whiteware, excluding United States distribution costs, rose 6.6 per cent to $31.19 million.

F&P is now confident it is in good shape to improve its operating profit this year.

Group corporate affairs manager Richard Blundell said the worst was definitely over. "You've seen what we have got in the product sense. We have also cleared the ship out in the financial sense."

Chairman Colin Maiden said the results for the first two months this year were on budget for healthcare and finance. Whiteware was running behind budget but ahead of last year.

"We expect whiteware to make up the lost ground with stronger performances for the remainder of the year. With the restructuring undertaken and other initiatives in place, the directors anticipate an improvement in operating profit in the year ending March 2000."

F&P made a pretax operating profit of $58.83 million for existing businesses. After a $6.16 million loss on discontinued businesses, the profit was $52.66 million ($52.60 million before).

Accounting for one-off items, including a restructuring cost of $22.01 million, a writedown of fixed assets and provision for business closures and taxes, net profit fell sharply.

But if abnormals were excluded, profits were 2.6 per cent lower at $35.09 million.

Group revenue slipped 8.5 per cent to $773.38 million. Healthcare continued to be a main contributor, its earnings rising 39 per cent on a revenue growth of 17 per cent.

In the whiteware market, New Zealand sales were flat, but international whiteware sales rose 29 per cent. Australian sales were up 7 per cent but fell short of the previous year's growth due to loss of share in the fridge market with production hiccups.

A final dividend of 9c a share, the same as last year, will be paid on June 25. A special dividend of 15c was also announced, making a total dividend of 33c for the full year. Analysts said profits were mostly in line with expectations. They were reasonably confident F&P would be able to improve its healthcare business, but less clear about whiteware's prospects. The challenge was in whether F&P could expand its Australian and US market at a faster rate.

One analyst said: "It looks like they have had a good sweep out. They could do well this year."

Cavill White's John Cairns said the results were reasonable, "after the wake-up call." The company had realigned its whiteware business to a changing marketplace with a good range of products.

F&P shares closed up 10c at 590c.