Fisher & Paykel Finance lifts profit 6.9% in four months ended July
Fisher & Paykel Finance continues to be its parent company's "jewel in the crown," lifting operating earnings 6.9% in the four months ended July but its full-year result could be down on last year.
Thursday, August 23rd 2012, 4:16PM
by Jenny Ruth
The finance company's earnings before interest and tax (EBIT) rose to $10.9 million in the four months compared with $10.2 million in the same four months last year, Fisher & Paykel Appliances chief executive Stuart Broadhurst told the annual shareholders' meeting.
That compared with the "core" appliances division's $9.1 million EBIT.
Broadhurst says he expects the finance division's EBIT for the full year will be between $35 million and $38 million. EBIT in the year ended March was $37.8 million before a $6.8 million one-off litigation charge.
"Compared to the first quarter last year, the (finance) business has experienced slightly higher net margins," he says. "Costs have also been contained and bad debt expense has reduced." Lower funding costs also helped.
Gross Receiveables have fallen slightly from March 31 levels, reflecting softer retailing conditions but Q Card and Farmers Finance Card new business volumes have increased.
"New Merchant additions for the Q card offering have grown strongly," Broadhurst says.
"This year, we are also focused on enhancing the Farmers Finance Card. Last week, we launched the "pay later" product on Farmers Finance Card which allows up to 90 days interest free and gives cardholders more flexible payment options."
The finance division continues to maintain funding diversity and enjoyed good support for retail debenture funding in the last quarter, he says.
"We cancelled $85 million of wholesale banking facilities during the quarter to eliminate unnecessary costs. Some of these facilities were in place to cover any shortfall in the debenture book which might have arisen following the expiry of the Crown guarantee scheme in December 2011."
The finance division aims to increase its merchant reach from 15% to 20% over the next two years, targeting new retail channels such as the health and agriculture sectors and promoting customer loyalty to retailers, Broadhurst says.
"We will be delivering further technology solutions to customers including digital and online and expanding gift and cash card offerings," he says.
"The business will look to grow via selective acquisition and via partnerships for white label opportunities for retail stores. Any acquisitions considered would remain squarely within our core portfolio of receiveables."
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