Fisher & Paykel Healthcare Reports Record Half Year Net Profit, Up 10%
Fisher & Paykel Healthcare Corporation Limited today announced record net profit after tax of NZ$48.9 million for the half year, an increase of 10% over the first half last year.
Operating revenue was a record, at NZ$317.4 million, 4% above the prior comparable period or 12% growth in constant currency. Operating profit increased by 8% to NZ$72.6 million. Constant currency operating profit grew an outstanding 64%.
This record result reflects robust revenue growth in both product groups, further gross margin expansion and other operational efficiencies, offset by a reduction in foreign exchange hedging gains.
The company's directors have approved an increased interim dividend of 5.8 cents per ordinary share (2014: 5.4 cps).
Chief Executive Officer Michael Daniell said, "We are very pleased with the record results achieved in the first half as we continued to gain market share across the broad range of applications for our products."
Respiratory and acute care (RAC) product group operating revenue grew 6% to NZ$173.7 million, or 13% growth in constant currency, for the half. Operating revenue in the obstructive sleep apnea (OSA) product group grew 5% to NZ$138.1 million or 15% in constant currency, for the half. The proportion of the company's revenue generated from recurring items, such as consumables and accessories, continued to increase and accounted for 80% of core operating revenue.
"Our devices are helping doctors, nurses and respiratory therapists to improve the effectiveness and efficiency of care being delivered. In a hospital setting, the more intensive the care, the more staff required for care and the more costly the treatment. In the homecare setting, compliance with therapy is essential for a positive health outcome.
"Our innovative products are designed to encourage patient compliance and reduce the escalation of care, delivering significant cost savings to hospitals and healthcare systems around the world.
"We were particularly pleased with the robust revenue growth, 26% in constant currency, generated from new applications for our RAC products outside our traditional invasive ventilation market. These include oxygen therapy, non-invasive ventilation, humidity therapy, and surgery.
"Our range of masks used in the treatment of OSA continue to take market share. They have been a key contributor to the excellent growth in our OSA product group, with mask constant currency revenue up 20%", commented Mr Daniell.
A feature of the result was the ongoing substantial improvement in gross margin, which was 457 basis points in constant currency over the first half last year, due to favourable product mix, logistics and manufacturing improvements and increased volume from the company's Mexico manufacturing facility.
The company also continued to grow its investment in research and development (R&D) with R&D expenses increasing by 21% to NZ$31.3 million, representing 9.9% of operating revenue for the half.
"We currently have an extensive product development pipeline and expect to release, over the next 12 to 18 months, the largest number of new products in our history. This will include new humidifier controllers, flow generators, masks and consumables" said Mr Daniell.
The increased interim dividend of 5.8 cps, carrying full New Zealand imputation credit, will be paid on 19 December 2014. 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 2015 interim dividend. However, as the company is approaching its target gearing ratio, the directors have determined that the DRP will be offered without a discount in respect of the 2015 interim dividend payment.
Outlook for FY2015
"Our strategic direction remains consistent as we focus on developing innovative products, increasing the number of patients who can benefit from our products, extending our range of products and growing our international presence.
"We expect total core product group constant currency revenue growth to continue in the mid-teens for the remainder of the 2015 financial year. At current exchange rates (NZD:USD = 0.79, NZD:EUR = 0.63) we expect full year operating revenue to be approximately NZ$660 million and net profit after tax to be approximately NZ$105 million to NZ$110 million", concluded Mr Daniell.
Result highlights for the first half
10% growth in net profit after tax to a record NZ$48.9 million.
Operating profit increased by 8% to NZ$72.6 million, 64% growth in constant currency.
Increase in the interim dividend to 5.8 cps (2014: 5.4 cps).
4% growth in operating revenue to a record NZ$317.4 million, 12% growth in constant currency.
6% growth in RAC operating revenue, 13% growth in constant currency.
New applications consumables operating revenue grew 26% in constant currency, accounting for almost 45% of our RAC consumables revenue.
5% growth in OSA operating revenue, 15% growth in constant currency.
Continued strong performance from OSA masks, 20% revenue growth in constant currency.
Investment in R&D increased by 21% to NZ$31.3 million, representing 9.9% of operating revenue.
Selling, general and administrative expenses increased 5% to NZ$90.8 million, 9% growth in constant currency.
Financial Statements and Commentary
Attached to this news release are condensed NZ dollar financial statements and commentary. For convenience the income statement has been translated into US dollars. The US dollar financial statement is non-conforming financial information, as defined by the NZ Financial Markets Authority.
The company's financial statements for the six months ended 30 September 2014 and the comparative financial information for the six months ended 30 September 2013 have been prepared under the New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).
A constant currency analysis is also included. A constant currency income statement is prepared each month to enable the board and management to monitor and assess the company's underlying comparative financial performance without any distortion from changes in foreign exchange rates. The constant currency data provided is an estimate of the changes in the main income statement items after excluding the impact of movements in foreign exchange rates, hedging results and balance sheet translations. The data is based on the NZ dollar income statements for the relevant periods which have all been restated at the budget foreign exchange rates for the 2015 financial year.
The constant currency analysis 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. 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 2015 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/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: 31140272.
New Zealand Toll Free 0800 446 046 USA Toll Free 1800 742 9301
Australia Toll Free 1800 725 000 Hong Kong Toll Free 800 906 648
United Kingdom Toll Free 0808 234 1369 International +61 2 8373 3610
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: 31140272.
United Kingdom Toll Free 0808 234 0072 International +61 2 900 34211
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.
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