F&P Healthcare plans Mexico boost
Company aims to reduce exposure to US dollar.
Thursday, November 24 2011 || News || BY Jenny Keown, Businessday.co.nz
The Manukau-based firm yesterday reported a September half-year profit of $28.3 million, up from $16.9m at the same time the year before.
The 2010 figure included a one-off tax charge which dropped last year's profit down from $28.6m – 1 per cent above the 2011 half-year result. Shares closed down to $2.39 on the news.
Exchange rates continued to be volatile, chief executive Michael Daniell noted, as the kiwi rose above US88 cents in the first half year. However, operating revenue rose 3 per cent to $252m despite unfavourable exchange-rate conditions.
In US dollars, revenue from the sale of respiratory and acute care products rose 22 per cent, while products to treat sleep apnoea grew 14 per cent. Daniell said just over half of its operating revenue was now in US dollars.
To reduce its exposure to the volatile exchange rate, it planned to boost profit at its Mexican plant from $3m in 2011 to $25m to $30m over the next four years. "That basically reflects the cost of making product in Mexico versus the cost of making product in New Zealand," Daniell said.
The facility in Tijuana currently makes 20 per cent of the firm's consumables volume. Development of the Mexican facility would not be at the expense of Auckland jobs, he said. Temporary factory staff had lost jobs at its Auckland plant, but there had been no loss of permanent staff, he said. It still planned to grow operations "slowly" in Auckland.
The company would continue its strategy of selling directly into countries where it could, such as Japan, Turkey and Taiwan, where it had its own sales force.
Morningstar analyst Andrew Lange said the company had a good currency hedging position, and strong products in growth areas of the healthcare sector.
"It's a fairly positive result," he said. "The fact they are sticking to the same dividend is a vote of confidence because they are confident of their cashflow position."
The company will pay an interim dividend of 5.4c a share, unchanged from a year ago.
The company has started to sell its quiet Zest Q nasal mask in Europe and expected mask revenue growth to begin to accelerate.
It would start selling its Pilairo nasal pillows mask to New Zealand and Australia over the next few weeks.
