Fisher & Paykel Appliances shares soared in value on news yesterday the company had beaten its own profit forecasts and those provided earlier by analysts.
The reported profit was $35.5 million for the year ended March, compared with a loss of $88.3 million for the previous corresponding period. Last year's result was hit by $76 million of impairment losses.
The result was attributed to improved operations, lower interest costs and the group not having substantial abnormal charges compared with the previous year.
The shares spiked 12c to 62c on release of the result, back to levels seen last November, and closed at 61c.
"For the first time in a very long time F&P has beaten ours and the market's profit forecast and it has come from the appliance side of the business," Forsyth Barr broker Tony Conroy said.
"That said, the result was still weaker than the pcp so there is still a long way to go before F&P redeems itself."
Appliance revenue was $969.1 million, $10.3 million better than forecasts.
However, the United States business appeared to be struggling as the local US dollar sales fell 10% despite the new distribution agreement with Seers, he said.
Australia was stronger than expected, with local currency revenue up 5%.
The gross margin \was better than expected at 30.3% and it appeared that product quality improvement had been the key driver of that by lowering warranty claims.
"While it is good to see F&P beat forecast for a change, it needs to be remembered that the 2011 result was worse than the 2010 result. On the positive side, the appliance gross margin was stronger and that should provide a good platform for growth in the future," Mr Conroy said.
F&P chief executive Stuart Broadhurst said cash flow from operations, before the movement in loans to finance group customers, improved to $113 million for the full year compared with $88 million in the pcp.
Net debt was reduced by $73 million to $100 million due to strong operating cashflows and property sales. Interest costs were down 46% to $15.4 million.
Group revenue fell 4% to $1.12 billion.
During the year, market share grew for the appliance division in Australia and the New Zealand market share was back to pre-March 2010 levels, he said.
Higher sales were offset by price reductions.
This year, the company signed a long-term technology supply agreement with Haier Group that would generate revenue of between $20 million to $30 million a year. Earnings were expected to start in the first quarter of the 2013 financial year.
The finance business reported earnings up 20% on the previous year based on asset quality, credit management and overhead costs containment, Mr Broadhurst said.
Market conditions for the appliance division were expected to remain challenging in the coming year. Top-line growth opportunities, operational improvements and new product releases were expected to be partially offset by rising input costs - in particular raw materials.
