F&P Healthcare reports $48.1m year profit

By NZPA

Friday 31st May 2002

Fisher and Paykel Healthcare today reported a March year net profit of $48.1 million, the first period it has traded since being spun off as a separate company from Fisher and Paykel Industries.

The result was in the middle of the forecast range.

The company declared a fully imputed 25 cents per share dividend to be paid on June 27.

The result was on sales of $214.6 million, which on a pro-forma basis of continuing operations, compared with $193.1 million for the healthcare operations of a year ago.

The pre-tax operating profit on continuing operations was $94.9 million compared with $19.9 million.

Earnings per share rose to 56 cents from 10 cents.

The company, which sent shock waves into the market at its third quarter result when it said it was facing stiff competition with margins being squeezed, said it had a strong balance sheet and believed it was well positioned for future growth.

It said it was experiencing growth in core products, early acceptance of new products and had a fourth quarter foreign exchange currency gain of $11.9 million.

Chief executive Michael Daniell said the positive full year results reflected the continued strong growth in the company's core product groups of respiratory humidification, obstructive sleep apnea (OSA) and neonatal and patient warming products.

"The company's three core product groups all achieved significant growth in operating revenues in fiscal 2002, with OSA products up 25 percent, respiratory humidification up 7 percent and neonatal and patient warming up 33 percent."

Revenues for the fourth quarter reflected growth in OSA of 18 percent and neonatal and patient warming of 76 percent over the prior comparable period. Respiratory humidification revenues fell 9 percent against the strong prior comparable period, primarily as a result of a low northern hemisphere flu season and reduced OEM customer demand.

The company said it believed that the respiratory humidifier competitive environment remained largely unchanged during the quarter.

Mr Daniell said the company's OSA product group performance was pleasing with 27 percent volume growth achieved in flow generators in the fourth quarter of fiscal 2002.

He said this was particularly encouraging as it was significantly above market growth rates.

"Growth was driven by strong acceptance of our new integrated flow generator-humidifier, the core of an OSA treatment system, which was released into the US market in February. "

"Looking forward, we expect that demand for OSA heated humidification will grow further following the introduction of increased reimbursement levels in the USA by Medicare from July 1, 2002.

"As the market moves increasingly towards humidification we believe we are well positioned with our full range of OSA humidification products."

The company said that its successful entry into the nasal mask market would be further strengthened with the release of a new model during the next quarter.

In addition its recently developed proprietary Oracle oral mask was in the process of being introduced throughout the United States.

"The growth in our mask revenues since we introduced our first mask in June last year has been very encouraging and we expect masks to become increasingly important to our OSA business." said Mr Daniell. `

Mr Daniell said the growth in full year revenues in respiratory humidification was assisted by increasing market penetration in breathing circuits where Healthcare's single-use heated breathing circuits continued to gain market share.

The company has recently introduced its neonatal breathing circuits into Australasia and Europe.

It has applied for US Food and Drug Administration clearance for its neonatal circuits which, when received, will allow entry of these products into the large US market.

Growth in the neonatal warming segment was also strong and the company is optimistic about prospects for its new neonatal bubble system which builds on the company's experience in respiratory humidification and continuous positive airway pressure technologies, Mr Daniell said.

Commenting on the rise of the New Zealand dollar, Mr Daniell said the company's policy was to take out a mix of foreign exchange contracts and options covering periods of up to three years forward, and in certain circumstances, options only for a further two years.

Since October last year, the company had put in place new instruments with a face value of $295 million.

The company's shares had raced up to $18.60 in November shortly after it was spun off, but they fell sharply after the third quarter result. Initial reaction to the result was positive as the shares gained 25 cents to $9.00.

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