Fisher & Paykel Healthcare Corporation Limited today reported record net profit after tax of NZ$169.2 million for the year ended 31 March 2017, an increase of 18% over the previous year. Operating revenue was a record NZ$894.4 million, 10% above the prior year or 14% growth in constant currency.
Chief Executive Officer Lewis Gradon said, “This is a strong result. We continue to benefit from the increasing adoption of our products by healthcare providers as they strive to improve the effectiveness and efficiency of care for their patients in both hospital and homecare environments.”
The company’s directors have approved an increased fully imputed final dividend of 11.25 cents per share, taking the total dividends for the year to 19.5 cents per share, an increase of 17% on the previous year.
Both major product groups, Hospital and Homecare, delivered record operating revenue results. Hospital product group revenue grew 15% to NZ$500.4 million, or 19% growth in constant currency, and Homecare product group revenue grew 4% to NZ$381.5 million, or 8% growth in constant currency.
“We are pleased with our performance in both the hospital and homecare settings,” said Mr Gradon. “Growth in our Hospital product group was driven largely by new applications, which include nasal high flow, surgical and non-invasive therapies. Revenue growth from consumables used in new applications was a robust 24%, or 29% in constant currency for the year. This performance was supported by strong clinical and economic data demonstrating the benefits of our therapies and products.
“In the Homecare product group, our masks continue to perform well, with 9% revenue growth or 13% in constant currency, compared to the previous year. The new F&P Brevida nasal pillows mask, which was launched in August, is already showing great results in the markets where it is available. Our myAirvo home respiratory system is also growing strongly, building from our market-leading position in hospital humidification.”
Gross margin increased by 205 basis points during the financial year due to a favourable product mix and increased volume from the Mexican manufacturing facility. In Tijuana, Mexico, the company has now completed the purchase of a 15 hectare greenfield site and has commenced earthworks on the new facility. “We expect this building to be complete by early 2018, and it will be used to support manufacturing growth over the next five years, able to supply our global markets.”
The company’s investment in R&D continued, with expenses growing by 17% to NZ$86 million, representing 9.6% of operating revenue. “We are committed to continuous product improvement, and this investment has seen the introduction of a number of innovative products over the financial year, with a substantial pipeline of new products to come.”
The company has provided an update on its patent litigation proceedings with ResMed on page 67 of its annual report and disclosed that it has incurred litigation related expenses of $20.7 million in the 2017 financial year. “We recognise that this is a significant cost and did not enter into litigation lightly. We have been providing unique solutions for patients for more than 45 years and we take pride in our proprietary technology. We also respect the valid intellectual property rights of others and we are confident in our position,” said Mr Gradon.
The increased final dividend of 11.25 cents per share, carrying full New Zealand imputation credit, will be paid on 7 July 2017. The dividend reinvestment plan (DRP), 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 2017 final dividend. The DRP will be offered without a discount in respect of the 2017 final dividend payment.
Outlook for FY2018
“We are well placed to meet the growing global demand for our products. We have a consistent, well proven strategy for delivering sustainable, profitable growth. At current exchange rates we expect full year operating revenue for the 2018 financial year to be approximately NZ$1 billion and net profit after tax to be approximately NZ$180 million to NZ$190 million” concluded Mr Gradon.
Full Year Result highlights:
- 18% growth in net profit after tax to a record NZ$169.2 million.
- 13% increase in final dividend to 11.25 cps (2015: 10.0 cps).
- 10% growth in operating revenue to a record NZ$894.4 million, 14% growth in constant currency.
- 15% growth in Hospital operating revenue, 19% growth in constant currency.
- Revenue growth of 29% in constant currency for consumables used in noninvasive ventilation, Optiflow nasal high flow therapy and surgical applications, accounting for 54% of Hospital consumables revenue.
- 4% growth in Homecare operating revenue, 8% growth in constant currency.
- Strong performance from OSA masks, 13% revenue growth in constant currency.
- Gross margin improvement of 205 basis points for the full year, 206 basis points in constant currency.
- Investment in R&D increased by 17% to NZ$86 million, representing 9.6% of operating revenue.
- 86% of the company’s revenue generated from recurring items, such as consumables and accessories.
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.
General Manager Corporate
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Please find attached to this news release the following additional documents:
- Results in Brief
- Annual Report 2017, including financial commentary and constant currency analysis
- Annual Review 2017
- Corporate Governance Statement
- Appendix 1
- Appendix 7
- Section 209 notice
The 2017 Annual Report and Annual Review will be available online at www.fphcare.com/2017annualreport and the Corporate Governance statement will be available at www.fphcare.com/corporategovernance.
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 35 of the company’s Annual Report 2017 and the company’s constant currency income statement framework can be found on the company’s website at www.fphcare.com/ccis.
Full 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 NZST, 8:00am AEST (6:00pm USEDT) 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 will need to 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: 7802125.
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