KEY POINTS:
Fisher & Paykel Healthcare looks set to build new factories overseas to fuel growth.
Chief executive Michael Daniell said at yesterday's annual meeting that the breathing products maker doubled in size every four or five years, meaning it would reach its manufacturing capacity in about three years.
"As
part of our planning we'll be looking to spread our geographical risk and reduce costs, so it's likely we will plan to place a significant proportion of growth in manufacturing capacity offshore, as well as to grow our East Tamaki site," Daniell said.
Planning would start in about a month and regions as far apart as Asia, Mexico and Eastern Europe would be considered.
Nearly 1500 people are employed at the company's South Auckland site, which covers more than 51,000sq m and has enough space for three more buildings.
The mitigation of geographical risks included protecting against New Zealand's earthquake danger and being able to obtain enough staff.
"If we filled that [East Tamaki] site we could be employing as many as 6000, and that could be difficult to find," Daniell said.
Financial savings from an overseas operation would include labour and freight costs.
There were no plans to change current operations, Daniell said, "but you've always got to be reviewing that".
The average cross rate with the US dollar was about 74c for the first half of the financial year, provided the kiwi stayed at about 70c, he said.
"We expect to achieve first-half operating revenue, which under IFRS includes all foreign exchange hedging results, of approximately US$125 million to US$130 million, representing growth of approximately 15 per cent.
"In NZ dollars that's approximately $170 million to $175 million dollars - similar to the first-half last year due to NZ dollar appreciation."
The NZX-listed firm exported nearly 99 per cent of sales last year, and 62 per cent of trading revenue was generated in US dollars.
The company confirmed previous guidance for full-year operating profit (earnings before interest and tax) of about $75 million, at current exchange rates.
The average exchange rate to the US dollar had been 66c last year, Daniell said.
"So we do have a pretty substantial currency headwind," he said. "We've quoted a sensitivity of $2.1 million for every 1 per cent movement."
The company had some forward exchange contracts at about 68c, although a policy for 50 per cent cover on a rolling 12-month basis was largely with options above the current exchange rate.
Chairman Gary Paykel said he was pleased with record trading revenue of $349 million for the year to March, considering the pressure on exporters.
"Our growth is the result of our strategy to expand our range of products, to offer products to treat a wider range of conditions and to increase our sales presence in key markets around the world," Paykel said.
Shares closed down 2c yesterday at $3.39.