The recent trend of business for Fisher and Paykel Appliances continued in the six months ending September with appliances worse than expected, partially offset by the finance business.
Forsyth Barr broker Tony Conroy said that now, the finance business was more profitable than the appliance at both the earnings before interest, tax, depreciation and amortisation (ebitda) and earnings before interest and tax (ebit) levels.
"Looking at what we are likely to do - clearly there will be a downgrade to our forecasts as the hoped-for improvement in market conditions appears to be getting no closer," he said.
Fisher and Paykel reported ebitda of $46 million for the period, up 5.9% on the previous corresponding period. However, appliances ebitda was down 12.3% to $22.9 million and finance ebitda was up 33.5% to $23 million.
The reported profit of $11.3 million was well up on the loss of $82.4 million in the pcp but last year, there was $82.2 million of abnormals which dragged the profit down. Without the abnormals, Fisher and Paykel would have had a reported profit of just $200,000.
Managing director and chief executive Stuart Broadhurst said the balance sheet position had strengthened but appliance market conditions remained challenging.
Group revenue for the six months fell by 6% to $549.9 million, interest payments reduced by 49% to $9 million and tax expense was $5.4 million.
Debt reduction had been a key priority for the ground and during the six months, the debt fell by $23.9 million to $149.2 million, Mr Broadhurst said. Fisher and Paykel had successfully reduced debt from a peak of $502 million in May 2009.
The group's ebit was expected to be within a range of $63 million to $70 million, down from the earlier guidance of $78 million.
Mr Conroy said the downgrade was not a big surprise.
"A first cut of our numbers pre the result announcement had trimmed appliance ebit. Clearly, we have further to go."
Forsyth Barr would re-evaluate the share valuation of Fisher and Paykel after yesterday's announcement, he said.
