Sleep specialist ResMed (ASX:RMD) reported a decreased profit margin in its quarterly report released on Friday. Revenue for the first quarter was up 6 per cent to $422.5m compared to the previous corresponding period. Net income was up 1 per cent at $91m compared to 1Q2014. Diluted earnings per share for the quarter were up 2 per cent at $0.64 per share. “We are pleased to report excellent progress with our new product launches, as we continued to see double-digit revenue growth,” said Mick Farrel, ResMed’s chief executive officer. “Stronger demand for our new flow generator launches in the U.S. and continued growth in our Asia Pacific and European regions drove our results in the quarter.”
Gross margin in the third quarter came in lower than the previous corresponding period at 59.5 per cent. An unfavourable impact from foreign exchange rate movements, declines in average selling prices and a mismatched product and geographic mix were cited as the cause for lower margins. During the March quarter, ResMed repurchased 300,000 shares of its own stock for around $20.3m. The board of directors also announced on Friday a quarterly dividend of $0.28 per share. The dividend will be recorded on 21 May 2015 and be payable on 18 June 2015. The dividend will be payed in US dollars to the company’s common stock holders on the NYSE. On the ASX, holders of the Chess Depository Instruments will receive an equivalent dividend in Australian dollars.
Despite the improved profits overall, investors reacted to the lowered profit margin. Shares of ResMed are down 80c, or 8.54 per cent, at $8.57 per share around 12:48pm on Friday. RMD has advanced 63.88 per cent in the last 12 months and 24.21 per cent so far this year.