Fisher & Paykel Healthcare Reports Record Full Year Revenue and Operating Profit

Fisher & Paykel Healthcare  Corporation  Limited (NZSX:FPH, ASX:FPH) today announced  record revenue for the year ended 31 March 2005 and a 14% increase in operating profit to NZ$89.7 million.

Revenue growth of 12% to NZ$240.6 million for the year was achieved through ongoing growth in the company’s expanding product range and its increasing activities in international markets.  Profit after tax increased 12% to NZ$61.4 million compared with NZ$54.7 million in the prior year.

Over the year the company derived approximately 61% of its revenue in US dollars.  In US dollar terms, total revenue increased by 23% and operating profit increased by 25% compared with the prior year. Operating margin increased to 37.3% compared with 36.8% for the prior year.

Chief Executive Officer, Michael Daniell said that new products introduced during the year in each of the company’s obstructive sleep apnea (OSA), respiratory humidification and neonatal categories helped generate the revenue and earnings growth.

“These  new  products,  along  with  our  established  ranges  in each  of our  core  product  groups,  have helped us increase market share and we continue  to invest in the research and development  that will lead to further new products in the coming year.”

Dividend
The company’s  directors  have  approved  an increased  final dividend  for the financial  year  ended  31
March  2005  of  NZD  5.8  cents  per  ordinary  share,  carrying  full  imputation  credit.    This  dividend  is equivalent to NZD 29 cents per share prior to the five for one subdivision in October 2004. Non-resident shareholders  will receive a supplementary  dividend of NZD 1.024 cents per share.   The final dividend will be paid on 17 June 2005, with a record date of 7 June, and an ex-dividend  date of 1 June for the ASX and 8 June for the NZSX.

Revenue  Growth
Operating revenue for the company’s core product range grew 24%, in US dollar terms, over the prior year.   This increase  was driven by strong growth  in sales of devices  for the treatment  of obstructive sleep apnea, respiratory humidification systems and neonatal and warming products.   OSA revenue increased  by 34%, respiratory  humidification  revenue  increased  by 16%,  and neonatal  and warming revenue increased by 31% in US dollar terms.

“We are continuing to gain share in the rapidly growing OSA market.  Robust OSA product group growth was driven by combined revenue growth of approximately  70%, in US dollar terms, in nasal masks and CPAP  flow  generators.    Our broad  range  of mask  categories  has been  very well  accepted  by both dealers and end users.

Revenue growth in our respiratory humidification  product group was driven by increased penetration of our MR850 respiratory humidifier technology  and strong market share gains in both adult and neonatal breathing circuits,” commented Mr Daniell.

Strong  growth  in  the  neonatal  and  warming  product  group  was  from  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 by 15% to NZ$16.2 million or 6.7% of revenue for the twelve months ended 31 March 2005.  This was largely due to increased product development activity and the number of new products released during the year.

Selling, general and administrative  expenses  grew 14% to NZ$67.4 million, or approximately  18% in constant  currency  terms, as the company  continued  to expand  its operations  and its sales teams in North America, Europe and Asia.

Foreign Exchange Hedging
The company has in place a mix of foreign exchange contracts and call options with a face value of approximately NZ$189 million, the majority of which are for the year ending 31 March 2006.  These instruments are at average exchange rates of approximately 0.43 US dollars and 0.46 Euros to the New Zealand dollar and are to protect the company from exchange rate volatility.

Outlook
“We  expect  our  growth  to  continue  to  be  driven  by  an  increasing  range  of  innovative  products, opportunities to serve additional patient populations and international expansion.

To ensure we can meet growing demand for our products we have begun construction  of a 23,300m2 building in addition to the existing 28,000m2  facility on our Auckland site. This approximately  NZ$60m investment will accommodate  additional manufacturing  and R&D capacity on completion in mid 2006, ” said Mr. Daniell.

“For the current financial year we expect a continuation  of strong underlying  revenue growth similar to the 2005  financial  year.   We expect  revenue  for the current  year  to be in the  range  of US$190  to US$195 million and operating margin percentage to be in the mid thirties.”

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

Full Year Results Conference Call
Fisher & Paykel Healthcare will host a conference call to review the results and to discuss the outlook for the 2006 financial year.  The conference call is scheduled to begin at 10:00am NZST, 8:00am AEST (6:00pm USEDT, Tues 17 May) and will be broadcast simultaneously over the Internet.

To listen to the webcast 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.

To participate in the conference call please dial in to one of the numbers below a few minutes prior to the scheduled call time and identify yourself to the operator:

New Zealand Toll Free       : 0800 449 118
Australia Toll Free              : 1800 555 619
USA Toll Free                     : 1866 369 4113
International                        : +61 3 9221 4420

An audio replay of the conference call will be available approximately  60 minutes after the call and will be accessible for two weeks at +61 3 9221 4752, access code 034357.

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.  For more information about the company visit www.fphcare.com

Contact: Michael Daniell MD/CEO on +64 9 574 0161 or Tony Barclay CFO on +64 9 574 0119.