F&P Healthcare profit grows 26%

Michael Daniell
Michael Daniell
Record revenue and after-tax profits have been reported by Fisher and Paykel Healthcare, which is surging ahead after an almost 20% boost to its research and development spending.

Operating revenue for the year to March was up 12% to a record $623.4 million, after-tax profit grew 26% to hit a record $97.1 million and R&D spending increased 18% to $54.1 million.

With all sectors facing uncertain economic times, the majority of listed companies have cried off giving detailed forward financial guidance, but Fisher and Paykel yesterday spelled out much of its year ahead.

Chief executive Michael Daniell issued a caution in his outlook, saying after-tax profit at the end of the current financial year might be ''similar'' to the past year's, because of unfavourable foreign exchange rates stripping more than $30 million from revenue.

''At current exchange rates we anticipate an operating profit headwind of approximately $32 million in the 2015 financial year from both reduced hedging and less favourable spot rates,'' he said.

He said despite the challenge of the ''large roll-off in hedging'', the company had momentum in both its product groups - respirators and breathing masks - that should offset the strong New Zealand dollar during the 2015 financial year.

Forsyth Barr broker Haley Van Leeuwen said the record profit was ''broadly in line with expectations'', noting that its foreign exchange hedging gains had contributed $54.6 million to operating profit, compared with $48.5 million the year before.

Craigs Investment Partners broker Chris Timms said the consensus of analysts for full year 2015 was for some growth in after-tax profit.

''There will be some downgrades coming through as other analysts bring their full-year 2015 forecasts into line with guidance,'' Mr Timms said.

Ms Van Leeuwen said with the forecast foreign exchange ''headwind'' of $32 million, the expectation of a similar after-tax profit for the current financial year would come from several areas.

The profit would be driven by ongoing expansion in gross profit margins due to favourable product mix, new products, operating efficiencies and increased volumes from the Mexican facility, plus supply chain efficiencies.

Mr Daniell said the company had increased R&D spending by 18% to $54.1 million, which represented 8.7% of operating revenue for the full year.

''We have a number of exciting new products under development, including masks, flow generators, humidifier systems and respiratory and acute care consumables,'' Mr Daniell said.

Fisher and Paykel had a clear strategy to meet the needs of an ageing demographic and was increasing investment in developing country healthcare, by continually improving and extending product ranges, serving more patient groups and expanding its international presence, Mr Daniell said.

- simon.hartley@odt.co.nz

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