Strong Demand Pushes Fisher & Paykel Healthcare Shares Higher

ASX-listed shares in Fisher & Paykel Healthcare (FPH) surged more than 6% in yesterday’s big sell-off after New Zealand’s most valuable company posted a 37% jump in its annual profit to a record $NZ287 million as the coronavirus caused an unprecedented increase in demand for its products.

The shares rose more than 6% to $31.67 in a market that sold off all day and lost 1.5%. During the day the shares hit an all-time high on the NZX of $NZ33.50 The shares at the close were up 51% for the year to date.

The company is New Zealand’s most valuable firm, with a market value of more than $NZ18 billion on the NZX ($A17.03 billion).

The profit jump came on a 18% in revenue to $NZ1.26 billion.

The company declared a final dividend of 15.5c NZ a share, which took the annual payout to 27.5c – up 18% on last year.

The company said sales of its breathing aids were boosted by the coronavirus pandemic in 2019-20, but the bigger impact may be in its new financial year, with the company forecasting another big jump in its sales and profits.

FPH told the ASX (and NZX) yesterday that while its performance in the year to March 2021 was hard to forecast, it was looking at record revenues and earnings.

The company has pencilled in a profit of $NZ325 million to $NZ340 million (on review around $NZ1.48 billion), assuming that global hospitalisations caused by Covid-19 peak before the end of June and hospitalisations for respiratory-related illnesses steadily return to normal by the end of September.

“We are continuing to grow manufacturing capacity of hospital products during our 2021 financial year to ensure a further increase in supply of our respiratory products is available if required,” CEO CEO Lewis Gradon said yesterday.

“The 2020 financial year was already on track to deliver strong growth before the coronavirus impacted sales,” he said. “Beginning in January, the demand for our respiratory humidifiers accelerated in a way that has been unprecedented.”

“With new processes, new procedures, and new ways of working safely, we managed to double and in some instances triple, output for some of our hospital hardware products over just a few months at the end of the year. I’m incredibly proud of our people and their unyielding commitment to doing the right thing for patients,” said Mr. Gradon.

For the Hospital product group, which includes products used in respiratory, acute and surgical care, operating revenue increased 25%, or 21% in constant currency, to $NZ801.3 million for the year. Sales from new applications consumables, which includes products used for nasal high flow therapy, increased by 23% in constant currency over the previous financial year.

For the Homecare product group, which includes products used in the treatment of obstructive sleep apnea (OSA) and respiratory support in the home, revenue rose 9%, or 4% in constant currency, to finish at $NZ457 million for the year.

FPH said its gross margin fell 73 basis points to 66.1%, “primarily driven by additional air freight costs required to acquire increased supply of raw materials and expedite finished goods to customers for patient use towards the end of the financial year, as well as the additional start-up costs of the company’s second Mexico manufacturing facility.”

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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