Fisher & Paykel Healthcare Reports Record Full Year Revenue from Strong Product Growth

Fisher & Paykel Healthcare Corporation Limited (NZX:FPH ASX:FPH) announced today that growth from new products contributed to the company achieving record revenue of NZ$214.9 million and an increased operating profit of NZ$79.0 million for the twelve months ended 31 March 2004.

During the year the company derived around two thirds of its revenue in US dollars.  In US dollar terms, revenue increased by 28% and operating profit increased by 33% compared with the prior year.  Operating margin continued to be very strong, increasing to 36.8% compared with 35.5% for the prior year.

New products introduced during the year in each of the company’s respiratory humidification, obstructive sleep apnea (OSA) and neonatal categories helped generate the increases.  Further significant new product releases in the current year are expected to deliver ongoing growth.

Profit after tax was NZ$54.7 million for the twelve months compared with NZ$49.9 million for the prior year, excluding that year’s unrealised foreign currency gain of NZ$23.0 million after tax.

The company’s directors have approved an increased final dividend for the financial year ending 31
March 2004 of NZD 28 cents per ordinary share, carrying full imputation credit.  Non-resident shareholders will receive a supplementary dividend of 4.94 cents per share.  The final dividend will be paid on 18 June 2004, with a record date of 11 June, and an ex-dividend date of 7 June for the ASX and 14 June for the NZX.

Revenue Growth
Operating revenue for the company’s core product range grew 29%, in US dollar terms, over the prior year. 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  34%,  OSA  revenue  increased  by  17%  and neonatal and warming revenue increased by 63% in US dollar terms.

“We continue to be 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.

“Indications are that the OSA market continues to grow strongly. Our OSA product group revenue growth was driven primarily by market share gains by our CPAP flow generators and nasal masks. New models of flow generators and masks, introduced during the year, contributed to second half total flow generator and mask revenue growth of 45%, in US dollar terms”, 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 by 22% to NZ$14.1 million or 6.6% of revenue for the year ended 31 March 2004 compared to 5.5% of revenue in the prior year.  This increase was largely due to increased product development activity and the number of new products released during the year.

Selling, general and administrative expenses grew approximately 17%, 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.

“We are planning further significant new product introductions during the current year including additional CPAP flow generators, masks and new humidified breathing system technology,” said Mr. Daniell.

“We will also continue to grow our international sales activities and for the current year we expect strong underlying revenue growth similar to the 2004 financial year.  We expect operating margin percentage for the current year to continue to be in the mid 30’s.”

Foreign Exchange Hedging
The company currently has in place a mix of foreign exchange contracts and call options, up to two and a half years forward, with a face value of approximately NZ$329 million. These instruments are at average exchange rates of approximately 0.44 US dollars and 0.435 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.

Full Year Results Conference Call
Fisher & Paykel Healthcare will host a conference call to review these results and to discuss the outlook for the 2005 financial year.  The conference call will be broadcast simultaneously over the Internet.

To listen to the webcast, to be held at 10:00am NZST, 8:00am AEST on Thursday 20 May (6:00pm USEDT, Wednesday 19 May), access the company’s website at  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 accessible approximately two hours after the webcast and will be available for approximately two weeks.

An audio replay of the conference call will also be available from approximately 1 pm NZST on 20
May, and will be available for two weeks. To listen to the replay dial +61 3 9221 4752. The passcode to access the recording is 006655.

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 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