F&P Healthcare lifts bottom of FY profit guidance, shares gain 4.1%
By Paul McBeth
Aug 22 (BusinessDesk) - Fisher & Paykel Healthcare, which makes respirators and sleep apnea products, raised the bottom-end of its forecast for annual earnings on stronger first-half trading and after revising its assumption for the New Zealand dollar. The shares climbed 4.1 percent.
The Auckland-based manufacturer expects to post annual net profit of between $65 million and $69 million on sales of between $540 million and $550 million, chief executive Michael Daniell told shareholders at today's annual meeting. That compares to previous profit guidance of between $62 million and $70 million on revenue of between $540 million and $560 million.
First-half profit is likely to rise 10 percent to $31 million on operating revenue of $265 million, Daniell said.
F&P Healthcare has embarked on a strategy to limit the impact of a strong New Zealand currency, as 52 percent of its sales are generated in US dollars and 23 percent in euros, by increasing capacity at its Mexican plant, running a considerable hedging programme, stripping out costs where it can, and using the local currency of more countries.
"We expect our constant currency gross margin to increase about two percentage points compared to the first half last year," Daniell said.
Chairman Tony Carter said the company's share price performance has been disappointing, with the "elevated exchange rate is undoubtedly a major reason" for the weakness.
The shares rose 4 cents to $2.04 in trading today, having shed 23 percent this year. The stock is rated an average 'hold' based on seven analyst recommendations compiled by Reuters, with a median target price of $2.41.