F&P Healthcare more than doubles Q1 earnings

By NZPA

Friday 9th August 2002

Fisher and Paykel Healthcare today posted a record earnings result of $30.43 million for the first quarter to June 30, buoyed by foreign exchange gains.

The result is more than double the $14.09 million earnings figure recorded in the same period a year earlier, but was inflated by $17.5 million in forex gains.

The medical equipment company, spun off from the Fisher and Paykel Industries conglomerate in November last year, said the quarter showed growth in core products and a strong uptake of new products.

"We are very encouraged by the progress we've made in the quarter," managing director and chief executive Michael Daniell said in a conference call.

"Revenue for our three core product groups, respiratory humidifier systems, obstructive sleep apnoea (OSA) products and neonatal care and warming, grew 10 percent in US dollar terms -- a significant lift in growth from the March quarter."

OSA products were the standout performers during the quarter, with revenue growing by 18 percent to $US9.4 million ($NZ20.91 million).

Earnings before interest and tax totalled $18.6 million, in line with expectations, but down slightly on last year's $22.14 million figure.

Total operating revenue for the quarter was $50.92 million, down 3.6 percent on the same year ago quarter.

Looking ahead, Mr Daniell said Healthcare was unfazed by the volatile economic environment in the United States -- the company's core market.

"People get sick and people need to be treated, no matter what the economic situation," he said.

The second quarter was traditionally weaker due to the northern hemisphere summer, but the company still expected to increase total revenue growth by several percentage points over the 9 percent recorded in the first quarter, Mr Daniell said.

For the full year to March 2003, he expected Healthcare's revenue in US dollar terms to grow by 12 percent.

"For the full year we are expecting total revenue to be approximately $100 million, representing about 12 percent for the year and nearer 15 percent for core products," he said.

Assuming an average NZ/US dollar cross rate of US47 cents, Mr Daniell expected operating margin to be about 35 percent for the second quarter and above 35 percent for the full year.

Analysts were pleased with today's result, with Brook Asset Management's Simon Botherway describing it as "fantastic".

Shares in Healthcare, 20 percent owned by sister stock Fisher and Paykel Appliances, bounced 10 cents to $9.20 following the result against a year high of $16.90 and a low of $7.80.

Investors turned sour on the stock early this year after it reported a weak third quarter 2001 profit of $14 million in February, as margins were eroded by strong competition from rivals US-based Respironics Inc and Australia's Resmed Inc. The shares have undergone a gradual recovery since then as the company has moved to keep shareholders better informed on developments.

The top 10 stock has a market capitalisation of $929 million.

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