F&P Healthcare hits $1b milestone
Fisher & Paykel Healthcare topped $1 billion in revenue, reported a record full-year net profit, and expects further gains in the current financial year as it puts litigation behind it and benefits from the lower kiwi dollar.
Net profit lifted 10 per cent to $209.2 million in the 12 months to March 31 while revenue was up 9 per cent at $1.07b, the Auckland-based maker of hospital equipment and personal sleep apnea products said.
The 50-year-old company has come a long way since it was founded. Its first humidifier traces its origins to 1969 with three people in one city and a can-do prototype made from a humble fruit preserving jar. Sales in 1972 were $20,000 ($270,000 in today’s money).
Its gross margin for the latest full year lifted by 56 basis points to 66.9 per cent — or 58 basis points in constant currency — driven by a favourable product mix, it said.
“Our record results were driven by our innovative products, the dedication of our teams around the world, a culture of continuous improvement and the value we offer for clinicians and patients,” said chief executive Lewis Gradon.
The company will pay a fully imputed final dividend of 13.5 cents per share on July 5 with a June 14 record date.
The total annual dividend of 23.25 cents a share is up 9 per cent on the year.
Given the company’s strong performance over the last five years and reduction of debt to below the target gearing rang, the board has suspended the dividend reinvestment plan.
As a result, all shareholders will receive dividends in cash for the dividend scheduled to be paid on July 5 2019.
The stock closed yesterday at $16.07.
Looking ahead — at current exchange rates — it expects full-year operating revenue to be approximately $1.15b and net profit to be $240m to $250m.
Recent changes around research and development tax credits and “a significant reduction in patent litigation costs and forecast currency benefits have been factored into our earnings guidance for 2020”, the company said in a statement to the NZX.
After being locked in patent disputes with its rival, ResMed, since 2016 and spent $23.4m on litigation expenses in the 12 months to March 31 and $15.6m in the prior financial year, F&P Healthcare has settled all outstanding patent infringement disputes.
Its guidance includes some potential remaining litigation expenses for the current year, but Gradon said it will be “a much smaller amount, maybe a couple of million”.