F&P Healthcare hit by exchange rate, profits slump

Fisher & Paykel Healthcare has reported a 54 per cent fall in half year net profit to $16.9 million, mainly due to unfavourable exchange rate movements and a one-off non-cash deferred tax charge.

Before the deferred tax charge of $11.7m, net profit for the six months to the end of September was $28.6m, compared to $37m a year earlier.

Operating revenue was down 3 per cent to $245m, with the company announcing an unchanged 5.4c per share interim dividend.

Strong growth was being seen in the respiratory and acute care product group and there had a been a "positive" response to the company's new ICON flow generator range, to be used for the treatment of obstructive sleep apnea (OSA), Healthcare said today.

Chief executive Michael Daniell said underlying revenue growth was expected to increase substantially in the second half in the OSA product group as ICON sales ramped up.

Strong underlying growth for consumables in the respiratory and acute care product group was expected to continue, he said.

With an average spot exchange rate of US77c for the NZ dollar for the rest of the year, F&P Healthcare estimated full year operating revenue of about $510m with net profit between about $60m and $63m, or between $48m and $51m after the one-off non-cash tax adjustment.

During the half year, about 56 per cent of Healthcare's operating revenue was in US dollars.

In US dollar terms, respiratory and acute care product group operating revenue increased by 18 per cent and OSA product group revenue rose 7 per cent, compared to a year earlier. Total operating revenue grew 9 per cent to US$173.8m ($229.2m) for the six months, the company said.

"Growth in demand for our respiratory and acute care consumables was very encouraging, at 23 per cent in US dollar terms, or 15 per cent in constant currency compared to the same period last year.

"That growth was supported by 32 per cent growth, in constant currency terms, from consumables used in the care of patients beyond our traditional invasive ventilation market," said Daniell.

Research and development costs rose 14 per cent to $18.6m, representing 7.6 per cent of operating revenue, with new product projects including flow generators, humidifier systems, masks and respiratory and acute care consumables.

Selling, general and administrative costs rose 6 per cent to $75.2m, with the company expanding operations at new distribution and clinical sales support centres in Japan, Taiwan, Hong Kong and Turkey.

F&P Healthcare said it also continued to expand operations and sales teams in North America, Europe, Asia/Pacific and South America.

During the half year capital expenditure was $23.9m, with about $19.9m of that in this country. The spending included increased manufacturing capacity, new product tooling, replacement equipment and ongoing site works for a third building on the company's Auckland site, Healthcare said.

Construction of the new 31,000sq m building was beginning this month, with a total cost of around $95m expected.

A further $3.3m was spend during the half year on the company's facility in Tijuana, Mexico, to expand the range of products manufactured in that country.

- NZPA