Analysts applaud F&P Healthcare H1 results

By NZPA

Thursday 7th November 2002

Analysts are pleased with Fisher and Paykel Healthcare's first half year performance, which saw the company's net profit rise by nearly a third.

Increased sales and a $9.1 million after tax foreign exchange gain pushed the company's net profit up 31 percent to $33.807 million for the six months to September 30.

"It was a reasonably buoyant outlook and we remain positive on the stock," said ABN Amro broker Mike Hare.

Analysts focused on revenue growth, particularly the company's full year target of $US100 million ($NZ203.62 million).

While total half year revenue was relatively flat, core product revenue (excluding items for which F&P acts as a distributor only) rose nearly 2 percent to $96.2 million for the half year.

It was up 6.45 percent to $47.8 million for the second quarter.

With margins around 34 percent in the first half and similar projections for the second half, analysts felt it a strong result.

"I think it's a positive result and very much underlines the strategy of commitment to research and development and on the back of that, introducing new products," John Cairns of Forsyth Barr Frater Williams said.

Those who bought shares at $14-$18 soon after the company listed in November last year would -- if they hadn't sold their shares -- be heartened at least by the attractive dividend yield, he said.

Today's interim dividend was 23 cents per share, with a target of 50cps at the end of the fiscal year.

F&P Healthcare shares surged 20c during the day but closed steady at $10.80.

Chief executive Michael Daniell said the results were better viewed in United States dollar terms, because the New Zealand currency had appreciated some 15 percent in the last 12 months.

The best performer was F&P's obstructive sleep apnoea (OSA) products, which leapt 40 percent in US dollar revenue during the second quarter.

That contributed strongly towards the 20 percent gain in September quarter revenue, while revenue for the six months grew 12 percent compared to the previous year.

In US dollar terms, respiratory humidifiers earned 9 percent more revenue, and neonatal and patient warming revenue increased by 7 percent over the previous comparable quarter in 2001.

Costs increased, and operating profit was $35.652 million for the half year (down 11.5 percent) and $17 million for the second quarter (down 1 percent).

Currency movements had also wiped $8.4 million from an unrealised foreign exchange gain in the first quarter, eroding second quarter earnings to $3.4 million after tax. First quarter earnings were $33.8 million.

The resurgence of the New Zealand dollar since September meant most of those losses had been recovered, Mr Daniell said.

With regard to the hold-up of the entry of its latest neonatal products on the US market, Mr Daniell said the company's six- month wait for approval could last longer, due to a US Food and Drug Administration (FDA) error.

"The FDA has been a little unpredictable through this year as other companies have reported as well," he told a briefing.

The agency typically took between six to 12 months to approve a product, he said.

However, all three core product groups had "significant pipelines" of new products under development and some would be launched next year.

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