Fisher & Paykel Healthcare Corporation Limited (NZSX:FPH, ASX:FPH) today announced a record profit of NZ$37.0 million for the six months ended 30 September 2009, 31% above the prior comparable period. This was a result of very strong revenue growth in its obstructive sleep apnea (OSA) product group, continuing strong demand for its respiratory products and favourable foreign exchange hedging results.
Operating revenue for the six months ended 30 September 2009 increased 18%, over the prior comparable period, to a record NZ$251.4 million. Recurring revenue, from sales of consumables and accessories, was approximately 75% of total operating revenue.
OSA product group operating revenue increased by 31% to NZ$118.8 million, reflecting strong demand for the company’s new premium flow generators and masks. Respiratory and acute care product group operating revenue increased by 8% to NZ$117.4 million.
“Constant currency operating revenue growth for OSA masks and flow generators was a very robust
20%, as we gained market share with our new premium products.
Growth in underlying demand for our respiratory humidifier systems was pleasing, considering the exceptional first half last year which included backorders and substantial orders for contracts in the United States. Allowing for those sales last year, we estimate that underlying constant currency revenue growth for our respiratory and acute care product group was approximately 14%”, commented Fisher & Paykel Healthcare’s CEO, Mr Michael Daniell.
“We continued to make very encouraging progress in developing new clinical applications for our technologies beyond our traditional invasive ventilation and OSA markets. An increasing proportion of our respiratory and acute care revenue is derived from devices used to assist in the treatment of patients requiring non-invasive ventilation, oxygen therapy, humidity therapy and laparoscopic surgery.”
The company’s directors have approved an interim dividend for the half year ended 30 September 2009 of 5.4 NZ cents per ordinary share (2009: 5.4 cents), carrying full imputation credit. Non-resident shareholders will receive a supplementary dividend of 0.953 NZ cents per share. The interim dividend will be paid on 18 December 2009, with a record date of 9 December, and an ex-dividend date of 3 December for the ASX and 10 December for the NZSX.
The company has implemented a dividend reinvestment plan under which shareholders may choose to reinvest all or part of their cash dividends in additional ordinary shares.
Research & Development, SG&A
Research and development expenses increased by 23%, over the prior comparable period, to NZ$16.3 million, representing 6.5% of operating revenue. Current new product projects include flow generators, masks and additional respiratory care consumables.
Selling, general and administrative (SG&A) expenses grew 18% to NZ$70.8 million, or 14% in constant currency terms. This year the company has established new distribution and clinical sales support centres in Japan and Canada and has continued to expand its operations and sales teams in North America, Europe, Asia/Pacific and South America.
Foreign Exchange Hedging
The company had in place, at 30 September 2009, a mix of foreign exchange contracts and collar options, up to five years forward, with a face value of approximately NZ$600 million. The US dollar and Euro instruments were at weighted average rates of approximately 0.52 US dollars and 0.42 Euros to the New Zealand dollar and are to protect the company from exchange rate volatility.
During the September-October period the company monetised (closed-out) US$62 million of forward exchange contracts with maturity dates in the 2012 and 2013 financial years with a cash benefit of NZ$30 million being realised and applied to reduce bank debt. At 30 September 2009 the company had monetised US$11 million of forward exchange contracts with a cash benefit of NZ$5.5 million.
For the remainder of the 2010 financial year the company expects continuing growth in demand for its products and estimates that, at an average NZD:USD exchange rate of 0.74, it will achieve operating revenue of approximately NZ$500 million and profit after tax of approximately NZ$65 million to NZ$70 million.
“We are very encouraged by the better than expected growth we have achieved in the first half, which has offset the effect of the appreciating NZ dollar. We expect underlying growth to increase substantially in the second half, with accelerating growth in respiratory product demand. Over the next few months we plan to begin introduction of our new flow generator into the OSA market.
We will be continuing to expand our R&D, sales and distribution operations and will increase our manufacturing capacity with commissioning of our new facility in Mexico and installation of additional equipment in New Zealand,” concluded Mr Daniell.
Financial Statements and Commentary
Attached to this news release are condensed unaudited NZ dollar financial statements and commentary. For convenience the income statement has been translated into US dollars.
The company’s unaudited financial statements for the half year ended 30 September 2009 and the comparative financial information for the six months ended 30 September 2008 have been prepared under the New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).
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 remainder of the 2010 financial year. The conference call is scheduled to begin at 10:00am NZDT, 8:00am AEDT (4:00pm USEST) 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 if required. An online archive of the event will be available approximately two hours after the webcast and will remain onsite 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 themselves to the operator. When prompted, please quote the conference code of: 39555195.
New Zealand Toll Free 0800 446 041
Australia Toll Free 1800 701 269
USA Toll Free 1866 242 1388
International +61 2 882 36760
Conference Call Audio Replay
An audio replay of the conference call will be available approximately 2 hours after the call and will be accessible for two weeks by dialing one of the numbers below. When prompted please enter the conference code of: 39555195.
New Zealand Toll Free 0800 445 136
Australia Toll Free 1800 766 700
USA Toll Free 1866 214 5335
International +61 2 823 55000
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 and the treatment of obstructive sleep apnea. The company’s products are sold in more than 120 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.