Resmed shrugs off slumber
In the March quarter, earnings per share rose to US58¢ from US44¢ a year before, but with revenue growth of just 10 per cent to $US383.6 million weighing on sentiment.
The shares closed on Friday at $4.46, down 4¢ but clear of the day's low of $4.39.
"The shares rallied ahead of the release, which prompted some quick selling on the actual news," one securities analyst said.
Analysts had expected revenue for the quarter to reach about $US400 million, but rising competition in the US coupled with continuing sluggish sales in Europe weighed on the outcome.
US revenue rose 13 per cent, but in Europe growth was just 6 per cent, the company said. In the US, Resmed had robust 21 per cent growth in flow generator sales, which underpinned much of its revenue gains in that market.
In Europe, aggressive bidding by some competitors in the large German market resulted in loss of some business.
Analysts remain concerned about competitive pressures in the United States where rivals such as New Zealand's Fisher & Paykel have been active with new product launches.
In response, Resmed highlighted its own new product pipeline, especially approvals for the launch of a new product to treat chronic obstructive pulmonary disease.
Analysts pointed to management's success in containing costs, with more of Resmed's products now produced in Singapore.
Overall, a better than expected profit margin of 62.4 per cent helped lift the bottom line, analysts said. Nomura Australia analyst David Stanton 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 obstructuve sleep apnoea."
Resmed has declared a US17¢-a-share dividend, with holders of its locally listed shares to receive a US1.7¢-a-share payout.
Frequently Asked Questions about this Article…
ResMed reported earnings per share of US58¢ (up from US44¢ a year earlier) while revenue rose 10% to US$383.6 million for the March quarter, a result that weighed on investor sentiment.
Shares fell after the report because revenue missed analyst expectations (many had forecast about US$400 million), and the stock had rallied ahead of the release, prompting some quick selling when the actual numbers arrived; the shares closed at $4.46, off the day's low of $4.39.
US revenue rose 13% overall, with flow generator sales up 21% in the US, underpinning much of the growth; by contrast Europe grew just 6%, and ResMed lost some business in Germany due to aggressive competitor bidding.
Analysts flagged increased competition in the US from rivals such as New Zealand's Fisher & Paykel, who have been active with new product launches, and aggressive pricing/bidding in markets like Germany has also squeezed ResMed in Europe.
ResMed pointed to its new product pipeline — including approvals to launch a new product to treat chronic obstructive pulmonary disease — and management expects upside from rollout of home sleep testing in the US and focus on diseases linked to obstructive sleep apnoea.
A better-than-expected profit margin of 62.4% helped lift the bottom line, and analysts noted management's success in containing costs, partly by producing more products in Singapore.
Yes — ResMed declared a dividend of US17¢ per share, and holders of its locally listed shares are to receive a US1.7¢-a-share payout as reported.
Everyday investors should note the mixed picture: earnings and margins were strong, US demand and flow generator sales were robust, but overall revenue lagged analyst forecasts and Europe remains challenged; watch product launches, home sleep testing rollout and competitive moves for signs of medium- to long-term upside.
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