F&P Appliances’ profits decline and shares drop
The global recession is having its effect as the sales fell steeply in all the markets. Sales of Fisher and Paykel Appliances Ltd, the New Zealand based household appliance maker, fell by more than 13 percent in New Zealand, 8.5 percent in Australia, 13 percent in America and 19 percent in Europe.
The company expects a normalised net profit of NZ$25-NZ$30 million by March end as compared to a net profit of NZ$54.2 million last year.
The shares of the company also slipped more than 40 percent, a record low of NZ $ 0.58 since 2001 on Monday, when company mentioned of drop in profits and gave indications of raising more capital as its debts rise, which is expected to rise to about $570 million. The company may need a bail out by the government as well.
Grant Williamson, director at brokerage Hamilton Hindin Greene said, "Everyone knew there were difficult conditions they are trading in, but the company's in a worse shape than the market thought."
FPA, the white ware manufacturer, caters to the elites, contrary to its rivals like Whirlpool's Maytag, Sweden's Electrolux and South Korea's LG Electronics who cater for the masses. According to Bongard F&P shall be introducing its second-tier Elba brand in new markets starting from North America. F&P Appliances, makers of electrical appliances including washing machines and fridges, has a global marketing, sales and product alliance with Whirlpool Corp.
Bongard said, "Our higher-end brands globally are finding it difficult as consumers dive deeper in their brand and product choice."
To reduce costs Fisher & Paykel has been shifting manufacturing out of New Zealand to Mexico and Thailand but, according to the company, the costs associated with this went up by NZ$5-10 million, and the New Zealand dollar weakened.
Furthermore the salary of CEO has being cut by 7.5 percent and of senior executives by 5 percent. However, at present, the jobs are safe and the staff has been asked to take a roistered day off each month
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