F&P Healthcare posts 18% gain in full-year profit on record sales, upbeat about 2018

Fisher & Paykel Healthcare, the medical device maker, posted an 18 percent gain in full-year profit, meeting its guidance amid record annual sales, and said sales in the current year may reach $1 billion.

Profit rose to a record $169 million in the 12 months ended March 31, from $143 million a year earlier, the Auckland-based company said in a statement. Operating revenue climbed 10 percent to $894 million.

The medical device maker's profit was within the $165 million to $170 million range the company affirmed with its first-half results in November, and the performance for the 2018 year was expected to be better again, with operating revenue seen rising to about $1 billion at current exchange rates, with forecast profit of between $180 million and $190 million. F&P Healthcare declared a final dividend of 11.25 cents a share, making 19.5 cents for the year, up from 16.7 cents a year earlier.

"We are well placed to meet the growing global demand for our products," said chief executive Lewis Gradon. "We have a consistent,well-proven strategy for delivering sustainable, profitable growth."

F&P Healthcare counts North America as its biggest market and in the latest year revenue grew 13 percent to $435 million, making it the company's best-performing market. Sales in Europe rose 7 percent to $272 million while Asia Pacific sales advanced 9 percent to $155 million.

Sales in its hospital division rose 15 percent to $500 million, while homecare product sales increased a more modest 4 percent to $381 million. Helping drive profit growth was a 205 basis point increase in gross margin to 66 percent, which the company said reflected a favourable product mix but also increased output from its manufacturing plant in Tijuana, Mexico, where it aims to expand to supply global sales.

F&P Healthcare competes with Resmed and Respironics and is currently engaged in a patent dispute with Resmed which generated $20.7 million in legal costs in the 2017 year, it said.

"We recognise that this is a significant cost and did not enter into litigation lightly," Gradon said. "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."

The company filed patent infringement proceedings against Resmed, which countered with its own suit claim that F&P Healthcare's OSA (obstructive sleep apnea) products infringed its patents.

Research & development costs rose 17 percent to $86 million in the latest year.

F&P Healthcare shares last traded at $10.17 and have gained 1.9 percent in the past 12 months, lagging behind a 7.1 percent gain for the S&P/NZX 50 Index.

(BusinessDesk)