F&P Healthcare trading strength offset by high dollar

Exchange rate movements have sliced profits at Fisher & Paykel Healthcare [NZX:FPH] – offsetting record operating revenue driven by new products and clinical applications.

The company cleared $52.5 million in the year to March 2011, down sharply on last year’s $71.6 million, although this year’s net profit included a one-off deferred tax charge of $11.5 million.

Operating revenue was a record $NZ506.1 million, of which 54% was derived from US dollar sales.

“The reduction in the full year result primarily reflects unfavourable exchange rate movements, expenses related to the establishment and expansion of manufacturing in Mexico and a non-recurring NZ$3.2 million distribution termination payment received in the prior year,” the company said in a stock exchange filing.

An unchanged final dividend of 7 cents a share will be offered.

Chief executive Mike Daniell said exchange rates continued to be volatile, with the NZD:USD rate ranging between 80c and 70c over the past year.

Based on that range the company expects operating revenue for the 2012 financial year to be between $NZ530 million and $NZ580 million and net profit of between $NZ62 million and $NZ76 million.

“Our underlying revenue growth accelerated in the March quarter and we are anticipating a continuation of strong operating revenue growth this year, supported by new products and growth in new applications,” Mr Daniell said.

“Both our new direct sales operation in Japan and our manufacturing facility in Mexico are expected to make positive contributions to earnings this year. We are planning for our rate of revenue growth to exceed expense growth and are expecting better than 20% constant currency net profit after tax growth, as we begin to see benefits from those new operations along with other efficiencies.”

Mr Daniell said the company experienced accelerating revenue growth for its respiratory and acute care (RAC) and obstructive sleep apnea (OSA) product groups.

RAC product group operating revenue increased by 13% and OSA product group revenue increased by 8%, in US dollar terms, over the prior year.