F Healthcare lowers guidance on strong NZD, plans to expand manufacturing
By Rebecca Howard
Aug. 24 (BusinessDesk) - Fisher & Paykel Healthcare lowered full year earnings guidance due to the strong New Zealand dollar and patent litigation costs,
and separately announced plans to expand manufacturing to a third country.
In May, the medical devices maker said it expected operating revenue to be about $1 billion and net profit in a range of
$180 million-to-$190 million, based on the New Zealand dollar trading at 69 US cents. However, while trading has been
in-line with expectations for the first five months of the financial year, the kiwi has been firmer than forecast.
Assuming an exchange rate of approximately 72.5 US cents for the remainder of the year, F Healthcare expects operating revenue to approach $1 billion and net profit to be "in the range" of approximately $180
million to $190 million dollars, chief executive Lewis Gradon said in speech notes published ahead of the annual general
meeting.
The Auckland-based company lifted annual profit to a record $169 million in the 12 months ended March 31, from $143
million a year earlier, on a 10 percent lift in revenue climbed 10 percent to $894 million.
In the first half of the year, it is expecting operating revenue of about $460 million and net profit of some $80
million.
Regarding the patent litigation costs, Gradon noted ResMed withdrew its complaint in the US International Trade
Commission three months ago, saying it would file again shortly, but this has not occurred to date.
Various court hearings have been held in Germany over the past month and the company is awaiting the outcome of those
decisions. "To date we have been pleased with how the litigation has progressed" and the board and management "believe
that it is in the best interests of the company to assert our patent rights and vigorously defend the allegations made
against us," he said.
Gradon also said construction of the company's fourth building on our Auckland site is on track to be complete by 2020.
In Mexico, the earthworks for a second building are complete and the design and construction phases will begin shortly.
It anticipates the facility will be operational in mid-2018 and will provide additional manufacturing capacity.
"Once this facility is complete, we will begin to look into the possibility of manufacturing in a third location outside
of both New Zealand and Mexico, in order to further diversify our manufacturing operations," he said. He provided no
further detail.
Fisher & Paykel Healthcare shares slipped 0.1 percent to $11.64 and are up 37 percent so far this year.
(BusinessDesk)