ResMed hits new highs as quarterly earnings leap
Driven by buoyant sales of high-margin products, earnings per share hit US53¢ for the quarter, up from US42¢ a year earlier, which pushed the half-year earnings 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 recorded elsewhere. Despite challenging European conditions, Britain, France and Germany "delivered solid quarterly results", the chairman and chief executive, Mr Peter Farrell, told analysts.
The company said unit sales were growing at 4 per cent to 6 per cent in Europe, 6 per cent to 8 per cent in the US, and 8 per cent to 10 per cent in the Asia-Pacific region.
With the strong Australian dollar, production and assembly in Singapore now accounts for more than half of all units sold. This will eventually rise to an estimated 75 per cent, the company told analysts
on Friday.
Along with its production of high-end units in Australia, ResMed produces some low-end products such as masks in Malaysia.
The optimistic outlook, along with speculation that a weaker Australian dollar would give earnings a push, helped the shares hit new highs of $4.60 before easing slightly to finish at $4.58, up 30¢. ResMed's shares traded at $2.50 a year ago.
"These guys are industry best. They are great strategists," the 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.
A dividend of US17¢ a share was declared, with holders of its Australian-listed scrip entitled to a dividend of US1.7¢ a share.
Frequently Asked Questions about this Article…
ResMed shares rose to new highs after the company reported record December-quarter earnings and issued an optimistic growth forecast. Strong sales of higher-margin products, an upbeat outlook from CEO Peter Farrell, and speculation that a weaker Australian dollar could boost earnings all helped push the stock to a high of $4.60 (closing $4.58).
For the December quarter ResMed reported earnings per share of US53¢, up from US42¢ a year earlier. That lifted half-year EPS to US$1.02, up from US75¢ in the prior comparable period.
ResMed's revenue for the December quarter surged to US$376.5 million from US$332.7 million a year earlier. Revenue for the half was US$716.3 million, up from US$647.5 million.
Revenue growth was strongest in the US, rising 16% in the quarter (compared with around 10% elsewhere). Unit-sales growth was reported at 4–6% in Europe, 6–8% in the US, and 8–10% in the Asia‑Pacific region. Europe still delivered solid quarters in markets such as Britain, France and Germany despite tougher conditions.
ResMed produces high-end units in Australia and now does more than half of its production and assembly in Singapore, with that share expected to rise toward an estimated 75%. Some lower-end products, like masks, are manufactured in Malaysia.
Yes. ResMed declared a dividend of US17¢ a share. Holders of the company's Australian-listed scrip are entitled to a dividend of US1.7¢ a share, according to the announcement.
Wilson HTM analyst Shane Storey praised ResMed as 'industry best' and strong strategists, noting the company had a great quarter. He also cautioned that the coming quarter will be up against very strong year-earlier numbers, which could make growth comparisons more difficult.
The company gave an optimistic outlook backed by strong sales of high-margin products and regional growth—especially in the US and Asia‑Pacific. Investors should note the analyst caveat that future quarterly comparisons may be tougher because this quarter’s results were particularly strong, and that currency moves (like a weaker Australian dollar) were cited as a possible future boost to earnings.
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