Shoppers will have to pay more for Sunbeam coffee machines, kettles and blenders from next month due to a weaker Australian dollar.
Parent company GUD Holdings, which also owns Oates cleaning products, says it will increase the pricetags of its Sunbeam electrical appliances by about eight per cent to offset currency impacts.
This comes after GUD suffered a massive 90 per cent fall in net profit from $17.3 million to $1.7 million in the six months to December 31.
The main reason for the slump was a non-cash goodwill and inventory impairment of $18.5 million, mostly linked to GUD Holdings' industrial and commercial business Dexion.
GUD managing director Jonathan Ling said Sunbeam and Dexion's financial performances in the half year were not satisfactory.
He said Sunbeam's profit margins were hit by higher product costs linked to currency movements.
Exacerbating this was the company's decision to defer price increases until the third quarter in order to maintain Sunbeam sales momentum and market share, and heavy discounting in the lead up to Christmas.
"The area we didn't manage as well was the promotional discounting in the pre-Christmas period and because it had such a large impact in November and December, it hit us very suddenly," Mr Ling said.
Mr Ling said as far as he was aware, no one else in the kitchen appliance market had lifted prices and that it was "a real bunfight for market share".
"We have a number of initiatives in place for the second half which should restore profitability," he said.
"For Sunbeam, this includes an average eight per cent price increase occurring next month to repair the gross margin position."
Sunbeam is also expected to benefit from the company regaining Big W's electric blanket business and ranging in Woolworths supermarkets.
Dexion racked up $15 million in writedowns to its goodwill and in obsolete and slow moving stock.
Mr Ling said weak project demand in the Australian racking products market and unrecovered overhead costs associated with operating its Malaysian factory at volumes below its break-even position were behind the writedowns.
The company has forecast a full year profit in the range of $82 million to $88 million.
Shares in GUD Holdings were down 78 cents, or 9.87 per cent, to $7.15 at 1531 AEDT.
SUNBEAM PRICES TO RISE
* Half year profit of $1.7m, compared to $17.3m profit in 2014/15
* Revenue of $354m, up 20pct from $297m
* Fully franked interim dividend of 20 cents, unchanged
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