Fisher and Paykel Appliances Holdings Ltd is attributing a plunge in net profit after tax for the six months to September to $980,000 - compared with $11.3 million in the corresponding period last year - to lease and litigation costs.
The result included two one-off adjustments related to an "onerous" lease of $2.5 million before tax and litigations costs of $5.9 million, the company said in a statement to markets yesterday.
A case was recently heard in the High Court in Auckland, with a judgement expected before December 31, and the directors considered it prudent to make provision "given the uncertainty". The company expected 12-month operating earnings before interest and tax of about $33.5 million and normalised operating earnings before interest and tax of about $42 million.
The board remained concerned about macro economic conditions in its key markets, particularly Australia, and it was unclear how the volatile conditions in Europe would affect Australasia.
Craigs Investment Partners broker Peter McIntyre said it was a weak result although it had been well signalled.
One of the big factors was foreign exchange but also subdued demand and high costs of raw materials. On a positive note, the balance sheet was in "not too bad a shape", with a further reduction in net debt by $6 million to $94 million.
In 2009, Chinese appliance manufacturing giant Haier took a 20% stake in Fisher and Paykel Appliances for more than $80 million. It would be interesting to see whether Haier moved to increase its shareholding, Mr McIntyre said.
