Fisher & Paykel Healthcare reports record first half revenue from strong product growth

Fisher & Paykel Healthcare Corporation Limited (NZX:FPH. ASX:FPH)

Revenue  growth  from  new  products  contributed  to  Fisher  &  Paykel  Healthcare  Corporation Limited’s record first half revenue of NZ$104.9 million and an increased operating profit of NZ$37.0 million for the six months ended 30 September 2003.

In US dollar terms, both revenue and operating profit increased by 27% compared with the prior comparable six month period. Operating margins continued to be very strong at 35.3%.

New products in each of the company’s respiratory humidification, obstructive sleep apnea (OSA) and neonatal categories helped deliver the increases.  Significant new product releases in the coming months are expected to deliver ongoing growth.

Profit after tax was NZ$25.2 million for the six months compared with NZ$24.7 million in the prior comparable period, excluding that period’s unrealised foreign currency gain of NZ$9.1 million after tax.

Dividend
The company’s directors have approved an increased interim dividend for the financial year ending
31 March 2004 of NZD 24 cents per ordinary share, carrying full imputation credit.  Non-resident shareholders will receive a supplementary dividend of 4.24 cents per share.  The interim dividend will be paid on 5 December 2003, with a record date of 28 November, and an ex-dividend date of 24 November for the ASX and 1 December for the NZX.

Revenue Growth
Operating revenue for the company’s core product range grew 28%, in US dollar terms, over the prior  comparable  six  month  period.    This  increase  was  driven  by  strong  growth  in  sales  of respiratory humidification systems, devices for the treatment of obstructive sleep apnea and neonatal and warming products.  Respiratory humidification revenue increased by 37%, OSA revenue increased by 15% and neonatal and warming revenue increased by 48% in US dollar terms.

“We are very encouraged by the strong revenue growth in respiratory humidification. This was driven by increasing penetration of our MR850 respiratory humidifier technology, strong market share gains in adult and neonatal breathing circuits and also gains from currency translation,” said Managing Director and Chief Executive Officer, Michael Daniell.

“OSA product group revenue growth was driven primarily by strong acceptance of our new range of CPAP flow generators and rapid growth in nasal mask sales.  The new flow generators, which we began shipping in quantity to US customers in July and August, contributed to second quarter flow generator revenue growth of 28%, in US dollar terms.  Flow generator market share gains have continued in the second half,” commented Mr Daniell.

Growth in the neonatal and warming product group was due to strong growth in both neonatal warmers and neonatal breathing systems, which include the company’s infant CPAP system and infant resuscitator.

Research & Development, SG&A
Research and development expenses increased to 6.4% of revenue for the six months ended 30 September 2003 compared to 5.6% in the prior corresponding period, largely due to increased product development activity and the number of new products released during the six months.

Selling, general and administrative expenses grew approximately 21%, in constant currency terms as the company continued to expand its operations and its sales teams in North America and Europe and established new direct sales operations in Italy and Spain.

Outlook
“We  are  planning  further  significant  new  product  introductions  over  the  next  twelve  months, including additional CPAP flow generators and masks, new breathing circuit technology and a new patient radiant warming system. We will also continue to grow our international sales activities.  For the full year we expect a continuation of strong US dollar revenue growth and we are expecting full year revenue to be in the range of US$120 million to US$125 million,” said Mr. Daniell.

Foreign Exchange Hedging
The company currently has in place a mix of foreign exchange contracts and call options, up to three years forward, with a face value of approximately NZ$372 million.  These instruments are at average exchange rates of approximately 0.45 US dollars and 0.41 Euros to the New Zealand dollar and are to protect the company from exchange rate volatility.

Financial Statements
Attached to this news release are condensed financial statements in both NZ dollars and US dollars.

About Fisher & Paykel Healthcare
Fisher & Paykel Healthcare is a leading designer, manufacturer and marketer of heated humidification products and systems for use in respiratory care and the treatment of obstructive sleep apnea.  It also offers an innovative range of patient warming devices and neonatal care products.  The company’s products are sold in over 90 countries worldwide.

Half Year Results Conference Call
Fisher & Paykel Healthcare will host a conference call to review these results and to discuss the outlook for the remainder of the 2004 financial year.  The conference call will be broadcast simultaneously over the Internet.

To listen to the webcast, to be held at 9.30am NZT, 7.30am AEST on Tuesday 11 November (3.30pm USEST, Monday 10 November), access the company’s website at www.fphcare.com. Please allow extra time prior to the webcast to visit the site and download the streaming media software required.  An online archive of the event will be available approximately two hours after the webcast and will remain onsite for approximately two weeks.

An audio replay of the conference call will also be available from approximately 11.30am NZT on 11
November, and will be available for two weeks. To listen to the replay dial +61 2 8524 1009 international or 02 8524 1009 within Australia. The passcode to access the recording is 124996#.

For further information contact Michael Daniell MD/CEO on +64 9 574 0161 or Tony Barclay CFO on +64 9 574 0119 at Fisher & Paykel Healthcare Corporation Limited or visit the company’s website at www.fphcare.com