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F&P Healthcare on track for big profit

NZ NewswireNZ Newswire 21/11/2016 Tina Morrison

Medical device maker Fisher & Paykel Healthcare has increased first-half profit 26 per cent and widened its margins, reiterating its forecast for a record annual profit this year.

Net profit increased to $78.2 million in the six months to the end of September, from $62m in the same period a year earlier, it said, adding annual profit is likely to be towards the middle of its previously stated forecast range of $165m-$170m.

First-half revenue rose 12 per cent to $425.2m, and the company forecast annual revenue of $880m.

F&P Healthcare, which competes with Resmed and Respironics, lifted first-half sales of hospital products by 19 per cent and sales of homecare-based products by 5 per cent. Its gross margin expanded to 64.9 per cent from 63.3 per cent as it sold more profitable products, eked out supply chain efficiencies, and increased production in Mexico.

"Our longstanding objective is to double our constant currency operating revenue every five or six years," chief executive Lewis Gradon said. "Our performance this financial year to date is consistent with that objective."

To support its growth, F&P Healthcare plans to expand its infrastructure in New Zealand and Mexico, having agreed to buy a 15-hectare site in Tijuana, Mexico, close to its existing premises, and begun planning for the construction of a fourth building on its site in Auckland, New Zealand.

The new Mexico facility is expected to be completed by 2018, providing further manufacturing capacity to accommodate growth over the next decade, while the Auckland facility is expected to be completed by early 2020, and should accommodate growth in research and development operations for the following five years, it said.

In the latest period, F&P Healthcare increased research and development spending by 16 per cent and said it was pleased with the response to new products.

F&P Healthcare sells its products in more than 120 countries, with almost half of its revenue coming from North America, and almost a third from Europe.

The company will pay a first-half dividend of 8.25 cents up from 6.7 cents in the same period last year.

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