F&P Healthcare beats annual profit forecasts, says earnings will increase further this year

Friday 29th May 2015

Fisher & Paykel Healthcare, the medical device maker, beat its forecast for annual profit and said earnings would rise further in the coming year.

Net profit rose 17 percent to $113.2 million in the year ended March 31, ahead of its forecast range of $105 million to $110 million, the Auckland based company said in a statement. Revenue increased 8 percent to $672.3 million, ahead of the forecast $660 million.

Fisher & Paykel today forecast profit in the coming year of $125 million to $130 million, on revenue of $750 million.

The company, which competes with Resmed and Respironics, boosted sales of respiratory and acute care products by 9.3 percent to $368.2 million, and sales of obstructive sleep apnea devices by 7.8 percent to $291.1 million. It expanded its gross margin to 61.1 percent, from 58.6 percent the year earlier.

"We have exceeded our earnings guidance provided in November as a result of robust revenue growth in both major product groups, a continuation of gross margin expansion and through operating leverage, and despite a $26.7 million reduction in foreign exchange hedging gains compared to the prior year,” said chief executive Michael Daniell.

Fisher & Paykel exports the vast majority of its products. Excluding the impacts of currency movements, revenue rose 13 percent and operating profit jumped 57 percent, it said.

The company will pay a dividend of 8 cents per share on July 10, up from 7 cps the year earlier. It expects to pay out about 70 percent of net profit after tax to maintain its target gearing ratio, compared with a previous aim of more than 60 percent.

Fisher & Paykel, which gets 43 percent of its sales from the US, will assume direct responsibility for its respiratory care products in that market from July 19 after previous distributor CareFusion was taken over by Becton Dickinson. The company has expanded its distribution centre in the US and is doubling the size of its US hospital sales and support team.

An inventory sell down by the current distributors will have a temporary effect on respiratory and acute care revenue growth in the first half of this year, Daniell said.

Still, the increased focus that will be brought to selling the company's products is expected to support an increase in revenue growth over time, he said.

In the past year, Fisher & Paykel increased research and development spending by 20 percent to $65 million. Its updated AIRVO flow generator systems with new breathing tube technology, a new nasal cannula range and portable power supply is the first of a number of new products to be launched over the next 18 months, Daniell said.

Shares in Fisher & Paykel last traded at $6.30 and have edged up 0.8 percent so far this year.

BusinessDesk.co.nz

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