F&P Healthcare breathes easy

Michael Daniell was able to report good revenue growth yesterday. Sandra Mu / Getty Images

The air conditioning hummed and the humidity was perfect as Fisher & Paykel Healthcare upgraded its half-year profit guidance at the annual meeting in Auckland yesterday.

In a perfectly acclimatised room, Michael Daniell, chief executive of the breathing products manufacturer, said there had been good revenue growth in every product group during the first five months of the year.

The company - which makes heated humidification devices for respiratory care and treating obstructive sleep apnea - expected to achieve constant currency first-half trading revenue growth of about 20 per cent.

"With revenue growing strongly and a favourable product gross margin mix, we are now expecting first-half operating profit to be above that level, in the range of $44 million to $45 million," Daniell said. Previously, the company had expected a profit of about $42 million to $43 million.

It said yesterday it had sold fractionally more units than expected, but the mix included more high-value products with better gross margins.

In the last financial year, 98 per cent of sales came from exports, including 47 per cent from North America - 65 per cent of trading revenue was generated in US dollars.

In May, Daniell said operating profit for this year would be at a similar level to the previous year's record $104 million, based on an average exchange rate of 60c. Every 1c rise in the New Zealand dollar impacted about $3.5 million in operating earnings.

Daniell did not provide full-year guidance yesterday, but said the forecast would be updated when first-half results were released in November.

The introduction this year of a broad range of respiratory interfaces and several new humidifier controllers was a key part of a strategy to increase the value and number of patients the firm could access.

"We believe we can take a step further away from intensive care ventilation and also assist patients who require high-flow oxygen therapy, enhanced by optimal levels of humidity," Daniell said.

Chairman Gary Paykel said with new products being a vital driver of revenue growth, the company remained committed to investing in research and development.

The firm had recently opened its new $60 million manufacturing, administration and research facility.

"As a company we are confident about the future and our ability to increase value for our shareholders," Paykel said.