Fisher & Paykel Healthcare reports good half-year

Fisher & Paykel Healthcare (FPH) has outperformed its half-year financial expectations and upgraded its full-year profit guidance to about $70 million, a rise of between $3 million and $4 million.

FPH's after-tax profit for the half-year to September rose 18% to $33.3 million, operating revenue from sales hit a record $266.9 million, up 6% on a year ago, and its gross margin widened from 52.5% to 54.3%, from cost savings.

FPH is paying a fully imputed 5.4c dividend and its share price was up 9c at $2.53 after yesterday's announcement.

Craigs Investment Partners broker Peter McIntyre said the first-half result was "solid", partly reflecting a balance sheet benefit from the fall in the value of the euro from 0.66 in August to 0.638 by the end of September.

Also contributing were stronger sales in FPH's respiratory and acute care products, up 11% in revenue, and its obstructive sleep apnoea products, up 3%, he said.

Forsyth Barr broker Haley Van Leeuwen said the result was slightly ahead of market expectations and was an important indicator for FPH's business, in that the gross margin band was improving.

"The last few years has been tough for their business. However, the latest result does feel like they are creating some underlying momentum." FPH chief executive Michael Daniell said for the 2013 financial year, assuming current exchange rates for the remainder of the year, operating revenue was expected in a range of $545 million to $555 million, and after-tax profit in a $69 million to $72 million range.

"That represents a $3 million to $4 million improvement on the guidance we provided at our annual shareholders' meeting in August," Mr Daniell said.

Mr McIntyre said the major driver of the profit upgrade was a lift in the company's overall sales expectations in the second-half trading towards 15%, particularly for sleep apnoea products.

During the half-year, research and development expenses increased 7% over the previous year to $21.3 million, representing 8% of operating revenue.

"FPH have begun grabbing investors' attention. They have performed well for this [reported] half but have been seen as underperforming for the past two years," he said.

The company was now coping well with the high currency, had product developments under way, was managing its inventory better and had sales climbing, Mr McIntrye said.

simon.hartley@odt.co.nz