F&P Healthcare posts 26pc gain in first-half profit, forecasts record annual result

Fisher & Paykel Healthcare, the medical device maker, increased first-half profit 26 per cent and widened its margins. Photo / Dean Purcell

Fisher & Paykel Healthcare, the medical device maker, increased first-half profit 26 per cent and widened its margins, reiterating its forecast for a record annual profit this year.

Net profit increased to $78.2 million, or 13.6 cents per share, in the six months ended September 30, from $62m, or 10.9 cents, in the same period a year earlier, the Auckland-based company said in a statement. Annual profit is likely to be towards the middle of its previously stated forecast range of $165m to $170m, it said.

First-half revenue rose 12 per cent to $425.2m, and the company forecast annual revenue of $880m.

F&P Healthcare, which competes with Resmed and Respironics, lifted first-half sales of hospital products by 19 per cent to $236.6m and sales of homecare-based products by 5 per cent to $183.2m. Its gross margin expanded to 64.9 per cent from 63.3 per cent as it sold more profitable products, eked out supply chain efficiencies, and increased production in Mexico.

"Our longstanding objective is to double our constant currency operating revenue every five or six years," chief executive Lewis Gradon said. "Our performance this financial year to date is consistent with that objective."

To support its growth, F&P Healthcare plans to expand its infrastructure in New Zealand and Mexico, having agreed to buy a 15-hectare site in Tijuana, Mexico, close to its existing premises, and begun planning for the construction of a fourth building on its site in Auckland, New Zealand.

The new Mexico facility is expected to be completed by 2018, providing further manufacturing capacity to accommodate growth over the next decade, while the Auckland facility is expected to be completed by early 2020, and should accommodate growth in research and development operations for the following five years, it said.

In the latest period, F&P Healthcare increased research and development spending by 16 per cent to $41.6m, and said it was pleased with the response to new products.

The company said its range of masks used in the treatment of obstructive sleep apnea continued to take market share and revenue generated from the more profitable consumables and accessories continued to increase.

F&P Healthcare sells its products in more than 120 countries, with almost half of its revenue coming from North America, and almost a third from Europe. In the first half, a gain in the value of the New Zealand dollar meant it booked a foreign exchange hedging gain of $9.7m to operating profit, compared with $7.1m loss recorded in the same period a year earlier.

The company will pay a first-half dividend of 8.25 cents per share on December 21, up from 6.7 cents in the same period last year.

Its shares last traded at $8.71 and have shed 2.1 per cent this year.