Relief Rally Sees Fisher & Paykel Jump 5%

Shares in NZ-based medical company Fisher and Paykel Healthcare (ASX: FPH) jumped more than 5% at one stage yesterday despite the company turning in a flat performance for the six months to September 30 and offering a weak outlook for some parts of the business.

The company reported a 1% drop in revenue to $NZ900 million, or a 2% increase in constant currency. Net profit after tax for the first half was $NZ222 million, down 2% from the prior comparable period, or a 1% decline in constant currency.

Interim dividend was lifted to 17 NZ cents a share from 16 cents.

The shares ended up 4.5% to $32.30 after touching a day’s high of $33.01 because the results were not as weak as some analysts had expected and the declines were made to look weak because the company did so well in the year ago half with surges in revenues and earnings.

Investors though seemed to ignore what was hesitant outlook for the rest of the year from the company thanks to the uncertainty generated by the surges of Covid infections.

CEO Lewis Gradon said in yesterday’s statement:

“We have not changed our view on outlook for the remainder of the financial year since we last provided an update on the 18th of August,” “For the second half, we expect our Hospital hardware sales will continue to be impacted by COVID- 19-related hospital admissions.”

“However, as we said in our August trading update, many countries have already boosted their hospital treatment capacity, so we do not expect Hospital hardware revenue to continue at an elevated level for the rest of the year.

“In our Hospital product group, consumables volume is likely to be impacted by a number of different factors. Those include the ongoing COVID-19 hospitalisations around the world, the severity of the flu season during the Northern Hemisphere winter, and the ability of hospitals to return to their pre-COVID-19 rates for surgeries.

“Our second half last year corresponded to peak COVID-19 hospitalisations in North America and most European countries. I

“In the absence of further comparable hospitalisation surges around the world, we would expect our consumables revenue for the second half of this financial year to be lower than the second half last year.

“Continuing endemic COVID-19 hospitalisations, surgical activity approaching normality and the ongoing adoption of nasal high flow for applications other than COVID-19 would result in our consumables revenue increasing sequentially from the first half of this year.

“In our Homecare product group, growth in OSA masks is dependent on new patient diagnosis rates, which may continue to be impacted by COVID-19 and the supply of treatment hardware. We
continue to expect new patient diagnoses to be at or above FY21 rates for the second half of the2022 financial year.

“Ongoing localised surges in COVID-19 cases and civic responses indicate that it may yet be a long journey to get to a point where business and life are more predictable,” he added.

“As you may recall, the first half of the last financial year was a period of extraordinary demand during the initial surges of COVID-19. Our financial results in the first half of the 2022 financial year have continued to be very strong.”

In the Hospital product group, which includes humidification products used in respiratory, acute and surgical care, revenue for the first half was $NZ670 million, down 2% from the first half of the 2021 financial year, or an increase of 1% in constant currency. Hospital consumables grew 8% in constant currency, and of total Hospital product group revenue, 67% was from the sale of consumables and 33% was from the sale of hardware.

Gross margin was 63.1%, up 135 basis points or 53 basis points in constant currency compared to the first half of the 2021 financial year. High freight costs and air freight utilisation continued but were lower than the same period last year, impacting gross margin by approximately 190 basis points compared to pre-COVID-19 levels.

The company also announced that over the next five years it expects to invest approximately $NZ700 million in land and buildings. This includes a fifth building completing its Auckland campus and acquiring land for a second New Zealand campus. Over the next five years the company expects to add an additional three manufacturing facilities located outside New Zealand, the first of which is currently under construction in Tijuana, Mexico.


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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