ResMed not snoozing when it comes to share price
Driven by buoyant sales of high-margin products, earnings a share hit US53¢ in the December quarter up from US42¢ a year earlier, which pushed December-half earnings a share to $US1.02 up from US75¢.
Revenue for the quarter surged to $US376.5 million from $US332.7 million, reaching $US716.3 million for the half, up from $US647.5 million.
Revenue growth remained strongest in the US, rising 16 per cent in the quarter, well ahead of the 10 per cent growth elsewhere.
Despite the challenging conditions in Europe, Britain, France and Germany "delivered solid quarterly results", chairman and chief executive Peter Farrell told analysts.
Unit sales in Europe are growing at 4-6 per cent, 6-8 per cent in the US and 8-10 per cent in Asia and the Pacific, the company said.
With the strong Australian dollar, production and assembly in Singapore now accounts for more than half of all units sold, which will rise over time to an estimated 75 per cent, the company told analysts.
Along with its production of high-end units in Australia, ResMed produces some low-end products such as masks in Malaysia.
Optimism for its outlook, along with speculation a weaker Australian dollar will help push earnings further ahead helped to push its shares to new highs of $4.60 before easing slightly to finish at $4.58, up 30¢. Its shares traded at $2.50 a year ago.
"These guys are industry best. They are great strategists," said Wilson HTM analyst Shane Storey said of the results.
"It's had a great quarter, but the current quarter will be up against very strong year-earlier numbers", which may make growth comparisons difficult.
The strong gross profit margins at 60-62 per cent, coupled with low tax levels thanks to operations which are spread across Asia and Australia, also helped spark investor interest on Friday, analysts said.
Even after buying back 1 million shares during the quarter, ResMed had a net $US657 million in cash sitting on its balance sheet at the end of December. It flagged buying back another 1 million shares in the next six months.
A US17¢-a-share dividend was declared, with holders of its Australian-listed scrip entitled to a US1.7¢-a-share dividend.
Frequently Asked Questions about this Article…
ResMed shares jumped after the company reported record December-quarter earnings and flagged a continued robust earnings outlook. Strong sales of high‑margin products, analyst praise, optimism that a weaker Australian dollar could boost earnings, and plans for further share buybacks all helped push the stock to a new high of $4.60 (finishing at $4.58), up from $2.50 a year earlier.
In the December quarter ResMed delivered earnings per share of US53¢ (up from US42¢ a year earlier). December-half earnings per share were US$1.02, up from US75¢. Quarterly revenue rose to US$376.5 million from US$332.7 million, and half‑year revenue reached US$716.3 million versus US$647.5 million a year earlier.
Revenue growth was strongest in the US, rising 16% in the quarter, ahead of about 10% growth elsewhere. The company reported unit sales growth of roughly 4–6% in Europe, 6–8% in the US, and 8–10% in Asia and the Pacific. Management said Britain, France and Germany still delivered solid quarterly results despite challenging conditions.
ResMed now produces and assembles more than half of all units in Singapore, a share the company expects to rise toward an estimated 75% over time. High‑end units are still produced in Australia, while some lower‑end products such as masks are made in Malaysia. The shift to Singapore has been driven in part by currency considerations, notably a strong Australian dollar.
Analysts highlighted strong gross profit margins of about 60–62%. After buying back 1 million shares during the quarter, ResMed held net cash of US$657 million at the end of December and flagged plans to buy back another 1 million shares in the next six months. The company also declared a US17¢‑a‑share dividend, with holders of its Australian‑listed scrip entitled to a US1.7¢‑a‑share dividend.
Wilson HTM analyst Shane Storey called ResMed 'industry best' and praised the company's strategy, noting it had a great quarter. He also cautioned that the current quarter will be up against very strong year‑earlier numbers, which may make growth comparisons more difficult.
Yes. The article notes investor speculation that a weaker Australian dollar could further boost ResMed's earnings and help lift the share price. Currency effects are relevant because production and operations are spread across Australia, Singapore and Asia.
ResMed reported strong sales, high gross margins and a healthy cash balance, supported by share buybacks and a declared dividend — all positive signals for investors. At the same time, investors should be aware the company faces regional market challenges (Europe) and that future quarter‑on‑quarter comparisons may be tougher because of strong prior‑year results. Consider these factors alongside your own investment goals and risk tolerance.
Call 1300 880 160
Start a chat
Schedule a call
