Last week, Fisher & Paykel Healthcare (FPH), a New Zealand company that designs, manufactures and exports respiratory devices, released its full year result for the year ending 31 March 2013. This result was very strong with Net Profit after Tax (NPAT) to NZ$77.1m, increasing 20% on the previous year.

Its two divisions, Respiratory Acute Care and Obstructive Sleep Apnea, grew 18%* and 10%* respectively in the second half of the year, which was slightly above analyst expectations. This growth was due to the increasing demand for respiratory devices by the aging and smoking population.

It also provided in this result guidance for the financial year ending 31 March 2014 (FY14) of NZ$85m-$90m NPAT, an increase of 10%-17%. This is assuming the exchange rate of NZDUSD remains between 0.80 and 0.85.

With ninety-eight per cent of FPH’s operating revenue generated in overseas markets, the company’s earnings are very sensitive to currency movements. Many shareholders trade FPH shares throughout the year, in anticipation of the effect these movements will have on company earnings.

Milford has actively traded FPH to maximise returns for our shareholders. For example, in early February we bought some FPH shares at $2.38 and sold them later that month at $2.51. We then bought them back at $2.45 and sold them again at $2.65. We also bought shares on Monday at $3.01, in anticipation of this good result, and at the time of writing this comment, the share price has risen to $3.20.

FPH is a company that likes to under-promise and over-deliver. This time last year it reported to the market that it expected to deliver NPAT between NZ$62m-$70m for the full year ending 31 March 2013. It has since come to the market three times with upgrades to this guidance. FPH has proven it can produce strong earnings growth despite currency headwinds, so exceeding FY14 guidance, again, is highly probable.

 *These figures are in constant currency which eliminates the effects of exchange rate fluctuations

Victoria Harris


Disclosure of Interest: Milford Funds Ltd holds shares of Fisher & Paykel Healthcare on behalf of its clients.