UPDATE: F&P Healthcare on target to reach $1b operating revenue in next 3 years

Tony Carter told shareholders at their annual meeting in Auckland today that given the performance last year.

UPDATEDFisher & Paykel Healthcare [NZX: FPH] chairman Tony Carter says the medical device manufacturer is on target to hit $1 billion in operating earnings within the next three years.

Carter told shareholders at their annual meeting in Auckland today that given the performance last year and so far this year it was on tack to hit the $1 billion target. The company also announced today that long-term boss Mike Daniell is retiring in March.

F&P Healthcare sells medical devices and systems for use in respiratory care, acute care, surgery and for the treatment of obstructive sleep apnea in 120 countries. It gave updated earnings guidance today, up $10 million from its May forecast. Based on an exchange rate of 65 US cents, operating revenue is forecast to be about $800 million and net profit between $135 million and $140 million.

Carter said the company, which makes 99 percent of revenue outside of New Zealand, has a strong balance sheet, with gearing at year-end reduced to 10 percent, within the target range of 5 percent to 15 percent.

Following a board review of its gearing and dividend policies the company has reviewed the target debt ratio to a range of -5 percent to plus 5 percent to support business growth and its foreign currency hedging, Carter said. At the same time, the dividend payout ratio will be about 70 percent of net profit, to maintain that target gearing. Based on the upgraded outlook the board will consider another dividend increase this year.

Carter paid tribute to Daniell, retiring after 36 years with the company, including 25 years at the helm, saying he had been an outstanding CEO.

"He has taken this company from a small medical division of an iconic New Zeaalnd appliance manufacturer to be the global leader in respiratory humidification, with a market cap of more than $4 billion, more than 3,000 employees and over $600 million in assets."

Daniell will remain on the board as an extra director. He will be replaced as CEO in March by Lewis Gradon, another long-serving member of the team.

Gradon told shareholders today that he joined the company in 1983, when it had 40 employees and $1 million in revenue and had been "fortunate to have been part of this company's incredible journey".

Daniell said when he joined F&P Healthcare, it was a tiny R&D lab and he was "a bearded, longer-haired, flared-trousered and wide orange searsucker tie-wearing new graduate. After all it was the 1970s."

He attributed the company's success to its continuous development of new products and innovation. The company spent $65 million of R&D last year and has a number of new products due for release in the next two years.

New Zealand Shareholders Association chairman John Hawkins said he was pleased to see an internal appointement because there was evidence companies do better with internal appointments provided the board chooses the right person with the right skills.

Shareholders also voted on issuing up to 50,000 performance share rights to Daniell plus up to 120,000 share options.

Board member Roger France is also standing down but will remain a director until a successor is found.

France said F&P Healthcare was "an exemplar of what a New Zealand company should be - a global leader in its niche."

"Fonterra turns over roughly 30 times what F&P does," France said. "It would only take around 10 Healthcares to be as valuable to New Zealand and New Zealanders as one Fonterra."

Shares rose 0.4 percent to $7.25 and have gained 16 percent since the start of the year.


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