Fisher & Paykel Appliances' 12-month share price target by brokers ABN Amro Craigs has been downgraded almost 30% on expectations Australia will be the only sector showing growth next year, albeit significantly lower than this year.
Appliances, which has declined to make forecasts for its 2008 performance, posted an improved half-year after-tax profit up 16.7% at $29.3 million in November.
At the time, chief executive John Bongard said the volatility of raw materials costs, currency swings and the performance of individual economies in New Zealand, Australia, the US, Asia and Europe, made forecasting impossible to get right.
He did highlight expectations that of all its markets, Australia was expected to show strong sales and growth.
Yesterday, ABN broker Peter McIntyre said that while there was no change to ABN's full-year 2008 forecast of an after-tax profit at $65.1 million, the full-year 2009 forecast was downgraded almost 10% to $68.3 million.
‘‘Our view is trading conditions have deteriorated since December [and after Appliances' last financial announcement] and that Australia would be the only market showing growth next year.
But we expect that growth to be down significantly on sales this year due to a tightening economy,'' Mr McIntyre said.
The 12-month share price target was downgraded from $3.75 to $2.66 because of the expectation of reduced earnings, which included a 13% decline of the after-tax 2009 ABN forecast to $80.3m.
Mr McIntyre said the cashflow valuation of Appliances' finance division, which is on the market with some due diligence completed, stood at $275 million.
However, the estimated sale range of $295m-$345m would be difficult to achieve, except at the lower end, given collapses in the finance sector and difficulty obtaining funding, Mr McIntyre said.
