Rip-snorting half for F&P Healthcare

Record profit for Fisher & Paykel Healthcare - outlook strong

by Pattrick Smellie

Nov 19 (BusinessWire) - Surging demand for Fisher & Paykel Healthcare Ltd's obstructive sleep apnea products delivered a record first half profit of $37.0 million, the company announced this morning.

Assisted by $9.34 million in favourable exchange rate movements and early close-out of forward cover, the result was achieved on revenue of $251.4 million in the six months to September 30, up 18% on the same period a year earlier.

Pre-dilution earnings per share rose to 7.3 cents per share, up 33%, although gross margins at 54% of revenue were static, and compared with55.4% in the same period last year. An unchanged interim dividend of 5.4 cents per share has been declared, fully imputed for New Zealand shareholders, payable on 18 December.

The company's share price rose 2% to $3.11 immediately after the announcement.

"We are very encouraged by the better than expected growth we have achieved in the first half, which has offset the effect of the appreciating New Zealand dollar," F&P Healthcare's chief executive, Michael Daniell said.

"For the remainder of the 2010 financial year, the comany expects continuing growth in demand for its products and estimates that, at an average NZD:USD exchange rate of 0.74, it will achieve operating revenue of approximately $500 million and profit after tax of approximately $65 million to $70 million."

During the half, new sales support centres were established in Japan and Canada, and the company is now making sales in 120 countrie, with offices in 30.

North America accounted for 47% of operative revenue for the half, and Europe 31%.

OSA products showed 31% growth in sales to $118.8 million, reflecting strong demand for a new range of premium flow generators and masks introduced last year. Demand for respiratory and acute care devices remained strong, with operating revenue was up 8% to $117.4 million.

During the half, the company closed out US$11million of foreign exchange forward contracts, which were scheduled to mature in 2012, for a gain of $5.49 million. Since September 30, a further US$51 million of forward cover was unwound, creating a further New Zealand dollar benefit of $25.0 million, which will be recorded in the company's realised cash flow hedge reserves until the contracts would have expired, in 2012 and 2013.

Currency exchange rates remained very volatile, with the New Zealand dollar spot rate against the US dollar ranging from US55.4 cents to US72.6 cents during the half, a situation the company is managing by maintaining a mix of foreign exchange contracts and collar options up to five years forward with a face value of some $600 million.

"The US dollar and Euro instruments were at weighted average rats of approximately US52 cents and 0.44 Euros to the New Zealand dollar and are to protect the company from exchange rate volatility," Daniell said.

Research and development expenditure grew by 13% over the half to $16.3 million, representing 6.5% of operating revenue.

(BusinessWire) 10:31:50

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