F&P Healthcare ups production offshore due to NZ dlr

Friday 19th August 2011

Extreme volatility in the New Zealand dollar is affecting its business Fisher & Paykel Healthcare says, and its response is to ramp up manufacturing in Mexico.

The company today forecast full-year operating revenue in the range of $515 million to $530 million and net profit after tax in the range of $60 million to $65 million.

Shareholders at the annual meeting were told that this was an improvement of $3m on the guidance in May when the NZ dollar was US80c. The latest forecast assumed an exchange rate between US80c and US85c. The NZ dollar was US82.24c this afternoon.

For the half-year ending September 30, at current exchange rates, the company is forecasting operating revenue of $250m and net profit after tax of $27m.

"Exchange rate volatility continues to be extreme, with the NZ dollar well above its long term average value, particularly when compared to the US dollar and euro," chief executive Michael Daniell said.

He told shareholders that 99 percent of the company's sales were in currencies other than the NZ dollar.

"We are acutely conscious of the effect of the high NZ dollar on shareholder returns and we are endeavouring to address this in a number of ways."

The company was accelerating capacity increases at its manufacturing facility in Mexico.

"Originally, we had planned to place about half of our high volume consumables capacity in Mexico within five years.

"We intend to accelerate that process, to achieve the expected 20 million dollars of annual savings sooner," he said.

Last year 5 percent of the company's consumables output was from Mexico and by the end of this year it would be 20 percent, he said.

The company reported an annual net profit after tax, before non-recurring deferred tax charges, of $64m last year.

Chairman Gary Paykel said the board had elected Tony Carter to succeed him as chairman on April 1, 2012. Carter joined the board last year after retiring as managing director of Foodstuffs New Zealand.

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