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F&P Appliances see records surge in global sales, narrows full-year loss

02 Apr 2015

April 2 - Fisher & Paykel Appliances, the Auckland-based manufacturer and consumer credit company owned by China's Haier Group, narrowed its full-year loss in 2014 after sales growth across all its markets helped drive a surge in revenue.

The loss narrowed to $12.6 million in calendar 2014, from a loss of about $31 million in the nine-month period a year earlier, according to the accounts of Haier New Zealand Investment Holding Co. Sales rose to $1.13 billion from $772 million, on that basis, suggesting revenue still rose strongly on a like-for-like basis. It didn't provide pro-forma numbers.

Haier effectively rescued F&P Appliances in 2009 when it acquired a 20 percent stake as part of a capital raising that let the company refinance its debt. The local manufacturer got distribution into China as a result of a reciprocal agreement, the ability to further licence its technology and toll manufacturing opportunities. The Chinese company took full control in 2012 and F&P Appliances was delisted from the NZX.

Operating expenses rose almost as fast as sales, growing 42 percent compared to the year-earlier nine-month period to $1.12 billion last year. Within that, cost of goods sold rose 44 percent to $716 million, selling, marketing and distribution climbed 31 percent to $124 million and administration expenses jumped 37 percent to $229 million.

The company's wage bill climbed 52 percent to $247 million, while research and development spending rose 56 percent to $27.9 million. Notes to the accounts show that the company recognised grant funding of $5.3 million for research and development from Callaghan Innovation during the latest year, up from $1.3 million in 2013. The details were commercially sensitive, it said.

The appliances business achieved sales growth across the world, with the biggest gain coming from what has been a moribund European economy. Sales in Europe surged 69 percent to $110 million in 2014 from the year-earlier nine-month period. Australia remained the largest market, with sales up 46 percent to $384 million, followed by North America, which recorded 39 percent sales growth to $197.7 million. New Zealand sales rose 44 percent to $179.7 million and the rest of the world sales rose 42 percent to $82 million.

Fisher & Paykel Finance contributed about $137 million of revenue, up from $98.6 million in 2013.

Helping mitigate the size of the losses, the company paid no tax, recording a tax credit of $13.4 million, compared to a credit of $11.4 million a year earlier.

The company's appliance warranties extend out to 10 years for certain parts of its washing machine motors, although it expects most warranty claims to be settled in the next 24 months. The carrying amount of service warranties rose to $19 million at the end of 2014 from $16.7 million a year earlier. Within that, $16.8 million of the provision was used during the year while an additional $19.5 million provision was recognised.

Notes to the accounts show it put land and buildings at Reynosa, Mexico, up for sale last October. It has land and buildings listed as non-current assets classified as held for sale of $13.3 million as at the end of the year. The carrying value is "well below" the current market valuation, it said.

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