Impressive results from Fisher and Paykel Healthcare Corp Ltd (ASX:FPH) show us once again why this Kiwi oxygen mask manufacturer is a great player to have in your portfolio, and its guidance for next year shows no reason to put it on the sidelines. Back in South Australia’s Cooper Basin, oil/gas producer Beach Energy Limited (ASX: BPT) has signed an exclusivity agreement with geothermal power hopeful Geodynamics Limited (ASX: GDY).
Fisher Paykel Healthcare
Fisher Paykel has delivered another set of solid results, with net profit for the twelve months to 31 March 2014 up by 20%, or 53% on a constant-currency basis. The company also outlined guidance for FY2015, where they expect another 40% increase in constant-currency profit. Variance in the NZ-EU/USD exchange rates will obscure a lot of this growth, but the benefits will make themselves felt in other ways.
Most notably as the company’s sales operations expand internationally, operations will be conducted largely in the local currency (Euro or USD) where earnings will potentially benefit from both lower wages in the local region and favourable exchange rates. So while Fisher Paykel currently pays a hefty price for US and EU exposure, this equation could swing the other way in the future and Euros/dollars earned overseas will be converted back into native NZ dollar at a better rate. In the meantime, the company is reasonably priced and investors look likely to enjoy a steady stream of increasing dividends.
Beach Energy and Geodynamics
As part of their exclusivity agreement, Beach Energy will contribute $200,000 to a 12-month research program into the viability of using geothermal resources to supply heat/power to gas developments in the Cooper Basin. The agreement also provides the option of using carbon dioxide as part of the geothermal process, reducing carbon emissions.
While only a drop in the bucket for Beach, the funding is significant for Geodynamics and should give confidence to investors that research in alternative energy technology is ongoing. It also has the potential to deliver sizeable benefits to both companies in the medium future by reducing gas production costs and proving geothermal as a commercially viable power source. Beach Energy is one of Australia’s premier small oil/gas producers and is worth a look even if you have no interest in geothermal power. Better yet, read our special report on ways to take advantage of growing demand and limited supply for oil:
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Motley Fool contributor Sean O'Neill owns shares in Beach Energy.