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F and P Healthcare lifts 1H profit to record, affirms annual earnings guidance

Friday 22nd November 2013

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Fisher & Paykel Healthcare, which makes breathing masks and respirators, boosted first-half profit 34 percent to a record, reporting growth in both its major product lines, and affirmed its expectations for more annual earnings growth.

Net profit rose to $44.5 million, or 7.9 cents per share, in the six months ended Sept. 30, from $33.3 million, or 6 cents, a year earlier, the Auckland-based company said in a statement. Revenue advanced 14 percent to $303.9 million, with 15 percent growth in sales of both its respiratory and acute care products and its obstructive sleep apnoea line.

F&P Healthcare said it expects annual profit of between $90 million and $95 million, though trimmed its predictions for operating revenue to a range of $610 million to $625 million from between $625 million and $645 million on a slightly stronger currency than anticipated.

"This is a reflection of our strategy to increase the range of applications for our technologies and to extend the range of products we provide for use in the care of each patient," chief executive Michael Daniell said. "We expect our underlying revenue growth to be robust for the remainder of the year, driven by growing demand for a broad range of new products and new applications for our products."

In September, brokerage Craigs Investment Partners cut $2 million from its forecast for the manufacturer's annual profit to $95 million, citing a rally in the New Zealand dollar against both the US and European currencies, which account for about two-thirds of F&P Healthcare's sales.

The manufacturer's board declared an unchanged first-half dividend of 5.4 cents per share, payable on Dec. 19, with a record date of Dec. 6.

The shares were unchanged at $3.72 in trading yesterday, and have surged almost 51 percent this year, outpacing the 15 percent gain on the NZX All Index, a capital measure of all domestic stocks, over the same period. The stock is rated an average 'hold' based on seven analyst recommendations compiled by Reuters, with a median target price of $3.75.

F&P Healthcare lifted spending on research and development 21 percent to $25.8 million from a year ago, and invested $18.4 million in capital expenditure to ramp up its manufacturing capacity and product tooling.

Net operating cashflow edged up to $33.4 million in the six months ended Sept. 30 from $32.3 million a year earlier. Including investing and financing activities, there was a net outflow of $3.5 million, leaving F&P Healthcare with a cash deficit of $12.9 million.

Its gearing ratio, a measure of its debt to equity, was 29.2 percent as at Sept. 30, down from 31.5 percent a year earlier, though still beyond the company's target range of between 5 percent and 15 percent.

"As previously noted, the directors intend for the company to progressively move its hearing into the target range, subject to exchange rate movements, profitability and dividend payout," the company said.

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