Growth slows but ResMed looks ahead

Dual-listed sleep-disorder devices maker ResMed shrugged off softer than expected March quarter revenue growth by highlighting forthcoming product launches as it continues to run hard in its key US market.

Dual-listed sleep-disorder devices maker ResMed shrugged off softer than expected March quarter revenue growth by highlighting forthcoming product launches as it continues to run hard in its key US market.

In the March quarter earnings per share rose to US58¢ from US44¢ a year earlier, but revenue growth of just 10 per cent to $US383.6 million ($372 million) weighed on sentiment. The shares closed at $4.46, down 4¢, but off the low of $4.395.

"The shares rallied ahead of the release which prompted some quick selling on the actual news," one analyst said.

Analysts had expected revenue for the quarter to reach $US400 million but rising competition in the US and sluggish sales in Europe weighed on the outcome.

US revenue rose 13 per cent, but in Europe growth was just 6 per cent. In the US, ResMed enjoyed robust 21 per cent growth in flow generator sales, which underpinned much of its revenue gains there.

In Europe, aggressive bidding by some competitors in the large German market resulted in the loss of some business. Analysts remain concerned about competitive pressures in the US where rivals such as New Zealand's Fisher & Paykel have been active with new product launches.

In response, ResMed highlighted its new product pipeline, especially the approvals for the launch of a new product to treat chronic obstructive pulmonary disease.

Analysts pointed to management's success in containing costs, with an increasing portion of ResMed's product line-up now produced in Singapore. Overall, a better than expected profit margin of 62.4 per cent helped lift the bottom line, analysts said.

"We continue to see upside from ResMed's medium- and longer-term dynamics in terms of growth from the rollout of home sleep testing in the US and increased focus on diseases associated with obstructive sleep apnoea," Nomura Australia analyst David Stanton said.

ResMed declared a US17¢ a share dividend, with holders of its locally listed shares to receive a US1.7¢ a share payout.

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