F and P Healthcare beats 2013 guidance, forecasts boost in 2014 profit; shares gain to 2 1/2 year high

Thursday 23rd May 2013

Fisher & Paykel Healthcare, which makes breathing masks and respirators, expects to beat analyst expectations for 2014 profit as it surpassed its own guidance for 2013 profit today as a result of revenue growth, improved gross margins and operating efficiencies. The shares rose to a two-and-a-half year high.

Profit is likely to be $85 million to $90 million in the year ending March 13, 2014, managing director Michael Daniell said in a statement today. That's more than the $79 million-to-$83 million range expected in a survey of seven analysts by Merlin Consulting.

The stock rose 2.6 percent to $3.11, and has gained 23 percent this year.

F&P Healthcare said 2013 profit rose 20 percent to $77.1 million in the year ended March 31, ahead of its February guidance of about $75 million. The company, which competes with Resmed and Respironics, boosted operating revenue to a record $556.3 million in 2013 on strong demand for its respiratory systems and new masks to treat the condition obstructive sleep apnea.

"We expect our underlying revenue growth to continue to be robust this year, driven by a broad range of new products and applications," Daniell said in the statement. "Constant currency operating margin is expected to increase as a result of growth in higher margin differentiated products, cost reductions and other efficiencies."

The company expects operating revenue of $610 million to $630 million in 2014, Daniell said. The 2014 forecasts are based on the New Zealand dollar trading between 80 US cents and 85 US cents for the remainder of the year as about half its operating revenue is derived in US dollars.

In US dollar terms, sales of respiratory products rose 12 percent to US$245.5 million in 2013 while sales of devices to treat obstructive sleep apnea increased 3.9 percent to US$191.9 million.

F&P Healthcare expects to outlay $40 million in capital expenditure in 2014. That's down from $62 million in 2013 when it spent on new equipment to increase manufacturing capacity, new product tooling, replacement equipment and $33.6 million to complete a third building on its Auckland site.

Making an increased quantity and range of products at its plant in Mexico contributed to an increase in the company's gross margin, Daniell said. The gross margin jumped to 55.3 percent in 2013 from 53.2 percent the year earlier.

Research and development spending increased 9 percent in 2013 and current new projects include masks, flow generators, humidifier systems and respiratory and acute care consumables.

The company spent 6 percent more on selling as it expanded in North America, Europe and the Asia Pacific regions.

The company's diluted earnings per share increased to 13.8 cents in 2013 from 11.7 cents the year earlier. It will pay a final dividend of 7 cents a share on July 5, unchanged from the year earlier.

BusinessDesk.co.nz

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