Strong Half Year Result from Fisher & Paykel Healthcare: Record Net Profit of NZ$81.3 Million

Fisher & Paykel Healthcare Corporation Limited today announced its results for the half year ended 30 September 2017. Net profit after tax was NZ$81.3 million, up 4% from the prior comparable period. Operating revenue was NZ$458.4 million, 8% above the first half last year.

“Our first half results are in line with our expectations and reflect consistent momentum across both our product groups,” said Managing Director and CEO, Lewis Gradon.

Operating revenue for the Hospital product group, which includes products used in respiratory, acute and surgical care, was up 11% to a record NZ$262.5 million. Much of this growth was driven by the increasing adoption of Optiflow nasal high flow therapy. Products in the Hospital group now make up 57% of the company’s operating revenue.

“Take up of our Optiflow nasal high flow therapy globally continues to be very encouraging, with growth rates in the mid-20s percent range. This has been driven by the publication of more and more clinical studies showing the benefit to patients and hospitals that comes from using our Optiflow nasal high flow therapy,” said Mr Gradon.

The Homecare product group performed well, with operating revenue up 4% to NZ$191.3 million. This group includes products used in the treatment of obstructive sleep apnea and respiratory support in the home. The company’s obstructive sleep apnea masks (OSA) continued to perform well in particular, delivering 8% growth in constant currency.

“We have been very pleased with the response to our Brevida nasal pillows mask for treating OSA patients,” said Mr Gradon. “This mask has been available in the US since March this year and it was recognised with an HME Business New Product Award at the recent MedTrade tradeshow in Atlanta.”

Gross margin increased by 116 basis points to 66%, or a 47 basis points increase in constant currency, compared to the first half last year, primarily due to favourable product mix and increased production in Mexico. “Construction of our new manufacturing facility in Tijuana, Mexico is about to commence and we anticipate that the new facility will be operational in mid-2018. 35% of our manufacturing output now comes from Mexico, with the remainder coming from our New Zealand manufacturing facilities.”

The company’s investment in R&D increased, with expenses growing by 13% to NZ$47 million, representing 10% of operating revenue. “During the first half we began the introduction of a number of innovative new products, notably our SleepStyle continuous positive airway pressure device for patients with OSA, and Optiflow Junior 2 cannula for treating infants in respiratory distress.”

The company’s directors have approved an increased interim dividend of 8.75 NZ cents per ordinary share, an increase of 6% on the interim dividend last year. The interim dividend, carrying full New Zealand imputation credit, will be paid on 20 December 2017 with a record date of 6 December 2017. The dividend reinvestment plan, under which eligible shareholders can elect to reinvest all or part of their cash dividends in additional shares, will again be made available in respect of the 2018 interim dividend. The directors have determined that the DRP will be offered without a discount for the 2018 interim dividend payment.

“In the first half we absorbed additional patent litigation costs of NZ$9.8 million compared to the first half last year. Excluding the impact of these costs, growth in first half net profit after tax would have been 13%. An update on the status of the patent litigation is included in our interim report. We remain confident in our position and overall are satisfied with results to date.

 

Outlook for FY2018

”It is clear that we have large and diverse opportunities available in the short, medium and long-term. We have a number of new products that will be released over the next few years and intend that these products, along with our consistent growth strategy, will support sustainable and profitable growth over the long-term.

“At current exchange rates we expect full year operating revenue for the 2018 financial year to be approaching NZ$1 billion and net profit after tax to be approximately NZ$185 to NZ$190 million,” concluded Mr Gradon.

 

Result highlights for the first half

  • 4% growth in net profit after tax to a record NZ$81.3 million.
  • 6% increase in interim dividend to 8.75 cps (2017: 8.25 cps).
  • 8% growth in operating revenue to a record NZ$458.4 million, 8% growth in constant currency.
  • 11% growth in Hospital operating revenue, 12% growth in constant currency.
  • 19% constant currency revenue growth for consumables used in non-invasive ventilation, Optiflow and surgical applications, accounting for 55% of Hospital consumables revenue.
  • 4% growth in Homecare operating revenue, 5% growth in constant currency.
  • 8% revenue growth in constant currency in OSA masks.
  • Investment in R&D increased by 13% to NZ$47 million, representing 10% of operating revenue.

 

About Fisher & Paykel Healthcare

Fisher & Paykel Healthcare is a leading designer, manufacturer and marketer of products and systems for use in respiratory care, acute care, surgery and the treatment of obstructive sleep apnea. The company’s products are sold in over 120 countries worldwide. For more information about the company, visit our website www.fphcare.com.

Ends

 

Contact:

Investors: Marcus Driller
General Manager Corporate
marcus.driller@fphcare.co.nz
+64 (0) 27 578 9663
Media: Rachel Reynolds
Senior Communications Manager
rachel.reynolds@fphcare.co.nz
+64 (0) 21 713 911

 

Accompanying Documents

Attached to this news release are the following additional documents:

  • Results in Brief
  • Interim Report 2018, including financial commentary and constant currency analysis
  • Investor Presentation
  • Appendix 1
  • Appendix 7

 

Constant Currency Information

Constant currency information included within this news release is non-conforming financial information, as defined by the NZ Financial Markets Authority, and has been provided to assist users of financial information to better understand and track the company’s comparative financial performance without the impacts of spot foreign currency fluctuations and hedging results and has been prepared on a consistent basis each year. A constant currency analysis is included on page 17 of the company’s Interim Report 2018 and the company’s constant currency income statement framework can be found on the company’s website at www.fphcare.com/ccis.

 

Half Year Results Conference Call

Fisher & Paykel Healthcare will host a conference call today to review the results and to discuss the outlook for the 2018 financial year. The conference call is scheduled to begin at 10:00am NZDT, 8:00am AEDT Tuesday 21 November (4:00pm USEST, Monday 20 November) and will be broadcast simultaneously over the Internet.

To listen to the webcast, access the company’s website at www.fphcare.com/investor. Please allow extra time prior to the webcast to visit the site and download the streaming media software if required. An online archive of the event will be available approximately two hours after the webcast and will remain on the site for two weeks.

To attend the conference call, participants should dial in to one of the numbers below at least 5 minutes prior to the scheduled call time and identify yourself to the operator. When prompted, please quote the conference code of: 5427837.

New Zealand Toll Free 0800 423 970   US/Canada Toll Free 866 548 4713
Australia Toll Free 1800 573 793   Hong Kong Toll Free 800 961 105
United Kingdom Toll Free 0800 358 6377   International +61 9 913 3622