Just a few weeks ago, I wrote that Fisher & Paykel Healthcare Corp Ltd (ASX :FPH) was still a value purchase despite sitting at a 52-week high, having already risen 61% so far this year.
Today's half-yearly results release is likely to prove me right, with the company making gains in all the right places and an increased global focus providing impressive multi-currency diversification in both production and sales.
Here are the main highlights from the report:
- Revenue up 4% to $317.4 million NZD
- EBITDA rose 8% to $72.6 million NZD
- Net profit attributable to members up 10% to $48.9 million NZD (up 64% in constant-currency terms)
- Interim dividend rose 7% from 5.4 to 5.8 cents per share
- Operating margin improved 0.9% to 22.9%
- Gearing of 18.6% down from 21% in March and 29.2% last September
- Target gearing range maintained at 5-15%
Fisher and Paykel's diversified earnings make me think of another company, Sonic Healthcare Limited (ASX: SHL), which has a similar globally diversified earnings structure.
While Sonic is larger and more diversified, Fisher & Paykel is rapidly closing in with its operating revenue earned in the following currencies:
- US Dollars: 47%
- Euros: 24%
- Aussie Dollar: 6%
- Japanese Yen: 5%
- British Pounds: 5%
- Canadian Dollar: 4%
- NZ Dollars: 2%
- Other currencies: 7%
Further diversification is occurring, with US dollars declining from 48% of revenue previously, and the company's cost base has broadened with 27% of consumables now produced in Mexico.
As Fisher & Paykel expands further the company will gain better access to local markets, potentially allowing more sales and production to be conducted in local currencies, reducing future currency risk.
Additionally the company may be able to take advantage of low local interest rates – below 1% in many regions of the world – which are substantially cheaper than the company's average rate of 4.9% currently.
This lies further in the future though, and in the mean time investors can expect another strong full year result with a number of new product launches slated for the second half of 2015.
Fisher and Paykel may not be as good an opportunity as it was a year ago thanks to a substantially higher price and slowing growth, but the party certainly isn't over for shareholders just yet.