F&P Healthcare 1H profit rises 18%, on record sales, wider margins

Thursday 22nd November 2012

Fisher & Paykel Healthcare beat its guidance with an 18 percent gain in first-half profit, making record sales while keeping a rein on costs and widening its margins. Profit in the full-year would also beat its estimate.

Profit was $33.3 million, or 6 cents a share, in the six months ended Sept. 30, from $28.3 million, or 5.2 cents a year earlier, the Auckland-based company said in a statement. Sales rose 6 percent to $266.9 million.

The company's gross margin widened to 54.3 percent from 52.5 percent as growth in cost of sales lagged behind revenue growth at 2 percent. F&P healthcare will pay a first-half dividend of 5.4 cents a share, unchanged from a year earlier.

The strongest sales growth came from the company's respiratory and acute care division, where revenue climbed 9 percent to $142.9 million on demand for its RAC humidifier controllers and related consumables. The company's RAC products warm and humidify gases used for mechanical ventilation, reproducing functions of the nose and upper airways.

"We are pursuing opportunities to increase the number of patients our devices can assist, by expanding from our traditional intensive care ventilation market into non-invasive ventilation, oxygen therapy, humidity therapy, neonatal respiratory care and surgery," the company said.

Its obstructive sleep apnea products business lifted sales by 3 percent to $114.2 million in constant currency terms.

Its obstructive sleep apnea products business lifted sales by 3 percent to $114.2 million in constant currency terms. Also in constant currency terms, mask revenue growth of 11 percent in the second quarter as it rolled out its new Pilairo nasal pillow and Eson nasal mask.

"Health-care companies tend to be cyclical with their products," said Mark Warminger, a portfolio manager at Milford Asset Management. "With a new product you get the momentum back."

Its new mask products "have been very well received," he said.

Assuming current currency exchange rates endure, full-year sales would be $545 million to $555 million and net profit in a range of $69 million to $72 million. That's up from its August guidance of sales between $540 million and $550 million and profit of $65 million to $69 million.

The company lifted research and development spending by 7 percent to $21.3 million in the first half.

F&P Healthcare gets about 51 percent of its sales in US dollars, 22 percent in euros, 7 percent in Australian dollars and 5 percent in yen. During the first half, foreign exchange hedging gains contributed $21.2 million to operating profit, down from $22.2 million a year earlier.

Shares of the company last traded at $2.44 and have declined 3.6 percent this year. The stock is rated 'outperform' based on the consensus of seven recommendations compiled by Reuters, with a price target of $2.40.

BusinessDesk.co.nz

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