Fisher & Paykel Healthcare Corp, which exports 98 percent of its breathing masks and respirators, expects profit growth to stall in the coming year as it takes a $32 million hit to operating profit, reflecting reduced hedging contracts and less favourable currency spot rates.
The Auckland-based company said profit rose 26 percent to $97.1 million in the year ended March 31, in line with guidance, and it expects "similar" profit in the 2015 year.
Operating revenue rose 12 percent to $623.4 million in 2014 on increased volumes and is expected to be about $640 million in 2015, it said. The forecasts are based on the New Zealand dollar trading at 86 US cents although many currency strategists expect the kiwi to fall over the coming year.
F&P Healthcare, which competes with Resmed and Respironics, improved profitability in 2014 with its gross margin rising to 58.6 percent from 55.3 percent, as it benefited from new products, operating efficiencies in New Zealand and ramping up production in Mexico. Still, earnings are being crimped as the value of export revenue is reduced when converted into New Zealand dollars as the local currency holds at an "elevated" level.
Foreign exchange hedging gains contributed $54.6 million to its $143.5 million operating profit in 2014 although the company's hedging contracts are rolling off in the current year.