F&P Healthcare looking forward to bumper fourth quarter

By NZPA

Friday 14th February 2003

Fisher & Paykel Healthcare today announced a December quarter net profit of $26.2 million, up 86 percent, and said its fourth quarter should be better still.

The top 10 company, which makes devices to help people sleep, respiratory humidifiers and patient warmers, had a nine month net profit to December 31 of $60 million, up 51 percent on the year ago period.

The medical equipment maker said it expected a continuation of strong revenue growth in core products in the fourth quarter which would put it on track for total revenue of $US101 million ($NZ185 million) against $US89 million for the prior year.

That implies a net profit of $27 million for the March quarter although chief executive Michael Daniell admitted to analysts "there might be a little upside on that".

The March quarter has always been the best in four years since Healthcare has reported separately.

The company said it had increased its share of major markets in the United States and Europe.

The third quarter result included an unrealised foreign exchange gain of $13.9 million after tax.

Healthcare, whose main rivals include Australia's ResMed and Respironics of the United States, estimated its growth in market share for snoring treatment products (sleep apnoea) had increased at as much as four times the market rate, estimated at around 15 percent.

Over half its revenue is generated in the US with 29 percent coming from Europe and 18 percent from Asia.

The company revealed it had massive hedging contracts with a face value of $460 million in place to insulate it against the surging New Zealand dollar. It is hedged to its policy maximum for three years against the US dollar at an average US45.3c with lesser hedges against sterling and the euro at 0.45 euros.

"We think we are in an excellent position with the rates we have going forward in place," Mr Daniell said.

Gross profit margins for the quarter fell 1.4 percentage points against the September quarter to 65.8 percent mainly because of the effects of the rising New Zealand dollar -- up 26 percent in 2002 and 6 percent this year against the US unit.

Shares in Healthcare, which have traded a wide $14.04-$7.80 range in the past 12 months, closed five cents up at $10.00.

Revenues in the third quarter grew 17 percent in US dollar terms against the year ago period, driven mainly by strong growth in sleep apnoea products, which increased 36 percent in the quarter in US dollars.

This contributed to 20 percent revenue growth overall in the company's core product range.

Total operating revenue for the nine months fell 0.8 percent to $156.1 million. The pre-tax operating surplus before unusuals rose 53 percent to $91.2 million.

Earnings per share rose to 59 cents from 35.

Analysts said strong revenue growth in the largest sleep disorder treatment division was the highlight of the result.

"What other businesses are doing 36 percent revenue growth -- it's quite outstanding really?" said one. "Plus margins were excellent, they've had some success with little price rises and they have a high level of hedging so the near term outlook is quite positive."

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