Research by broker ABN Amro Craigs says the buoyant Australian economy will reflect well in F&P's full-year result, due out at the end of the month, but a combination of having to strike new steel supply contracts and an overall deterioration in the consumer market will prompt a downturn.
ABN maintains a "hold" recommendation on the stock, trading around $2.69, which is also the 12-month target price.
ABN broker Peter McIntyre forecast that in the second half of 2008 the whiteware manufacturer's after-tax profit would decline 8.5%, against the corresponding period last year, down to $32.8 million.
This he said, would be the result of increasing margin pressure and higher interest charges.
"New Zealand sales are under pressure.
Things are more positive on the Australian front, with their consumers in better [economic] shape than their New Zealand counterparts," Mr McIntyre said.
F&P has a strategic alliance with Whirlpool, which has reported a 20% decline in after-tax profit and issued a full-year profit warning, while F&P's outright competitor Electrolux reported a loss for the first quarter.
F&P, which in mid-April announced the lay-off of 430 production staff at Mosgiel in favour of offshore manufacturing, stopped giving precise guidance on financial expectations almost two years ago, having been hit hard by the strength of the New Zealand dollar and spiralling raw material costs - especially metals.
Mr McIntyre said the cost of steel formed a major proportion of F&P's operating costs and, while it was at present locked into a forward contract till next month, this agreement would have to be renegotiated after June at present rates.
Peter McIntyre's disclosure document is available on request.
