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Fisher & Paykel Healthcare tops $1 billion in FY revenue

Fisher & Paykel Healthcare tops $1 billion in FY revenue, upbeat about FY2020

By Rebecca Howard

May 27 (BusinessDesk) - Fisher & Paykel Healthcare topped $1 billion in revenue, reported a record full-year net profit and expects further gains in the current financial year as it puts litigation behind it and benefits from the lower New Zealand dollar.

Net profit lifted 10 percent to $209.2 million in the 12 months to March 31 while revenue was up 9 percent at $1.07 billion, the Auckland-based maker of hospital equipment and personal sleep apnea products said.

The 50 year-old company has come a long way since it was founded. It's its first humidifer began in 1969 with three people in one city and a can-do prototype made from a humble fruit preserving jar. Sales in 1972 were $20,000.

Its gross margin for the latest full year lifted by 56 basis points to 66.9 percent - or 58 basis points in constant currency - driven by a favorable product mix, it said. It is targeting a gross margin of 65 percent.

“Our record results were driven by our innovative products, the dedication of our teams around the world, a culture of continuous improvement and the value we offer for clinicians and patients,” said chief executive Lewis Gradon.

The company will pay a fully imputed final dividend of 13.5 cents per share on July 5 with a June 14 record date. The total annual dividend of 23.25 cents a share is up 9 percent on the year.

"Given the company’s strong performance over the last five years and reduction of debt to below the target gearing range" the board has determined to suspend the dividend reinvestment plan. As a result, all shareholders will receive dividends in cash for the dividend scheduled to be paid on 5 July 2019.

The stock last traded at $16.67 and has gained 25 percent over the past 12 months.

Looking ahead - at current exchange rates - it expects full-year operating revenue to be approximately $1.15 billion and net profit to be $240 million.

Recent changes around research and development tax credits and "a significant reduction in patent litigation costs and forecast currency benefits have been factored into our earnings guidance for 2020."

The New Zealand dollar recently traded at 65.50 US cents, down 2.43 percent year-to-date, and at 58.41 euro cents. Around 50 percent of its operating revenue is in US dollars while 19 percent is in euros.

Fisher & Paykel has settled all outstanding patient infringement disputes with ResMed. It had been locked in patent disputes with its rival since 2016 and spent $23.4 million on litigation expenses in the 12 months to March 31 after spending $15.6 million in the prior financial year.

Regarding its specific divisions, operating revenue for the hospital product group, which includes products used in respiratory, acute and surgical care, increased 12 percent to a record $642.3 million, or 11 percent growth in constant currency. The division represents 60 percent of its operating revenue.

Homecare, which represents 39 percent of operating revenue, saw operating revenue growth of 6 percent to $421.4 million, or 4 percent growth in constant currency.

It is also forecasting around $150 million in capital expenditure as "we increase capacity for both existing and new products and complete construction of the fourth building on our Auckland campus," it said.



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