REFILE-UPDATE 2-NZ's F&P Apps to shift plants; shares surge

(corrects typo in lead paragraph)

By Adrian Bathgate

WELLINGTON, April 17 (Reuters) - New Zealand's Fisher & Paykel Appliances Ltd FPA.NZ said it will shift three manufacturing sites to low-cost countries as it looks to stay competitive, sending its shares surging more than 15 percent.

The move would save the company about NZ$50 million ($40 million) before tax a year. About 1,000 jobs, or 28 percent of the total workforce, would be lost in New Zealand, Australia and the United States as plants were relocated to Mexico, Thailand and Italy, where a similar number of new jobs will be created.

While the market was not surprised to see Fisher & Paykel forced to follow its competitors in moving to low-cost manufacturing, the size of the savings was a bonus, said Guy Elliffe, senior portfolio manager at AMP Capital Investors.

"Those numbers are large, it's quite a material change in the context of their financials," Elliffe said.

Analysts surveyed by Reuters Estimates expect the company to post net profit of NZ$55.5 million in the year just ended.

Shares in Fisher & Paykel Appliances, a top 10 company in New Zealand, rose as much as 34 cents on the news to a one-month high of NZ$2.54, and were up 13.6 percent at NZ$2.50 by 0340 GMT.

The stock has fallen 27 percent so far this year, compared to a 12 percent drop in the benchmark top 50 index .NZ50.

A strong New Zealand dollar NZD=, high interest rates and free-trade agreements with low cost labour countries such as China had all made the cost of manufacturing in its home markets too high, Managing Director John Bongard said.

"It's one of the biggest days of change this company has ever seen," he told a media briefing.

COSTS ONE-SIXTH

The company said labour costs in Mexico are about a sixth of those in New Zealand.

The move would entail NZ$50 million in one-off costs, and NZ$100 million in capital expenditure, which would be met in the financial year started April 1. The plants would be relocated over the next two years and the full benefits would flow through in the 2011 financial year.

Most of the costs would be recouped by selling land that would now be surplus in New Zealand and Australia, Bongard said.

Fisher & Paykel Appliances, which makes kitchen and laundry appliances, had previously been moving manufacturing operations to Thailand and the United States from New Zealand and Australia to cut costs and get closer to key markets.

The company said it agreed to buy a refrigerator manufacturing plant from strategic ally Whirlpool Corp (WHR.N) in Mexico for $33 million. That plant would be expanded, as would existing sites in Thailand and Italy to cope with the additional production.

Fisher & Paykel said it would keep its research and development facility, head office and refrigeration plant in Auckland that employs 350 people.

The Dunedin, New Zealand, Range and DishDrawer factory, with 430 jobs, and Brisbane, Australia, refrigeration plant with 310 jobs would be shut down.

The Huntington Beach, California, operation would be scaled back, with the loss of about 330 jobs in manufacturing, but the retention of development and sales staff.

The company is a niche player catering for the top end of the market, as opposed to mass-market rivals such as Whirlpool's Maytag, Sweden's Electrolux (ELUXb.ST) and South Korea's LG Electronics (066570.KS). ($1=NZ$1.26) (Editing by Ian Geoghegan)