The carnage, as the mainstream media delight in calling it, has deepened on global sharemarkets this week. And while the bleeding on the NZ market has not been quite as sustained as on Wall Street, it has left investors reaching for the tourniquets.
Point of Order has no pretensions to being able to divine if and when the bleeding can be staunched and while there will be hopes the government’s fiscal package will do the trick, the bigger question mark is over the trend in those global bourses.
But while the doomsters portray the carnage as evidence of the economic shock the Covid-19 pandemic is delivering, there are some slivers of light in the enveloping gloom.
Some of them are coming from companies which are manufacturing products to be used in the battle against Covid-19.
Auckland-based Fisher and Paykel Healthcare’s shares climbed 9% on Monday and 8% on Tuesday to new record levels above $27.
Its respiratory humidifiers and consumables are directly involved in treating patients with coronavirus. An increase in demand globally has ramped up the company’s output. At the same time, it has benefited from stronger sales in the Homecare product group and a weakening of the NZ dollar.
F &P Healthcare has lifted its financial forecast for the year to March, saying it now expects to make $275m-$280m in profit on revenue of $1.24bn, based on an exchange rate of 61USc.
Previously the company had been forecasting revenue of $1.2bn and profit of $260m-$270m, but since February the NZ dollar has eased by US3c. Shares in the company have risen more than $12 to $27.20 in the last year.
CEO Lewis Gradon says the company’s highest priorities are the safety and welfare of its people and the patients who use products it manufactures.
“We are very appreciative of the support that we have received from our suppliers and from government agencies globally during this challenging time”.
At the other end of the country, Dunedin-based Blis Technologies, which recorded its first profit last year after 18 years, this week reported sharp increases in sales of its BLISTM finished goods, complementing a strong year of sales of its branded ingredients into international markets.
Brian Watson, CEO said:
“Sales of our BLIS probiotic brands through pharmacies and online channels in February and March were better than expected. This increase is across the Blis range but is particularly evident for our products with an immune boosting proposition. BLIS TravelProtectTM, UltraBLISTM, DailyDefenceTM and ThroatGuard PROTM have all seen a lift in sales over this period.We have noted media reports of immunity products seeing a lift in demand globally and it appears some of our current increased sales are related to COVID-19 concerns.
“We believe consumers are looking for products that may help support natural immunity. To date our supply chain, from ingredient supply through to manufacture of finished product has been able to meet the lift in demand and we have significantly increased our production to meet anticipated forward orders. We continue to monitor our supply chain for any future constraints.”
Blis Technologies has upgraded its revenue and earnings guidance for the financial year ended March 31. Guidance provided in February was for revenue of more than $9.4m and Ebitda in excess of $1m. The company now expects full year revenue of around $10m and Ebitda of between $1.5m to $1.7m, subject to completion of existing orders and audit.
The high demand for health products has also been encouraging for honey producer Comvita. It reports a strong performance through its online channels across all its markets as consumers seek ingredients known to support immune function. In China online sales grew in excess of 70% in the first 10 days of March. This has materially offset the impact of fewer shoppers in traditional retail.
CEO David Banfield says in North America, the performance has been good (+50%) from its biggest retail partners and orders on the Comvita.com platform globally have more than doubled versus the prior comparable period last year.
From a supply point of view Comvita’s product is clearing customs efficiently at the China border and its warehouse in Shenzhen is now operating at full capacity.
“In other markets internationally, Comvita is seeing an uplift in online demand for our immunity supporting products Propolis and Fresh-Picked™ Olive Leaf Extract, and UMF™ Manuka honey.”
In another food field, King Salmon – in an update in the context of a rapidly evolving situation brought about by the COVID-19 virus – reports it is confident that the product portfolio remains very relevant in this time, with healthy food top of mind for consumers around the world.
“We are planning on the basis our foodservice markets will be affected at some point. We will mitigate these impacts with a greater focus on retail and online channels, and other product formats such as smoked and frozen.
“Maintaining supply chain continuity is also important. As travel restrictions become more prevalent, NZ King Salmon is working with key logistics partners to ensure we can access our markets.
“While passenger flights are reduced, we will extend our usage of cargo aircraft, as well as our frozen sea freight programme. We continue to work with suppliers to anticipate and manage any potential disruptions to inbound materials, and to date have no concerns.As China shows signs of recovery from COVID-19, our fresh salmon sales to this market are up and running again after a brief hiatus due to supply chain delays.
“Although China is a developing market representing only around 2% of our total sales portfolio, this is a good example of our diversification strategy”.
King Salmon CEO Grant Roswearne says at this time the company sees no need to change the previously advised guidance for the FY20 year ended 30 June— a pro forma operating Ebitda of $25m-$28.5m, based on currently known factors.
A2 Milk, which markets milk products it claims have particular health benefits, lifted revenue in the December half to $806m, up 31.6% to beat earlier guidance The company has worked hard to ensure that product has been available in online sales channels and it reported China & other Asia segment revenue of $317.2m, up 76.7%,
After a detailed strategic review in 2019, A2 Milk stepped up investment in its China label infant nutrition business considerably.
“We have also expanded our team in China, reviewed and optimised relationships with distributors and are focusing on the biggest opportunities for growth.
“We are pleased our investments to deepen our understanding of consumer and channel trends and the increased levels of investment in marketing and capability development are translating into accelerated growth in our China label business.
“For the period, we achieved sales in a2 Platinum® China label infant nutrition of $146.7m, double the sales we achieved in the previous corresponding period. In addition to driving in-store productivity, we also expanded our footprint to 18,300 stores, up from 16,400 stores at the end of 2H19.
“Furthermore, we achieved our highest market value share in the MBS channel during the period. These indicators give us confidence that our strategy is on track. We are committed to maximising our growth opportunities, including through product innovation. We launched a China label version of our Stage 4 product in December and recently re-launched our Stages 1, 2 and 3 China label products with a tamper-evident lid for additional product security.
“Our infant nutrition portfolio is complemented by our other nutritional products as we broaden our appeal to existing consumers and seek to connect with new consumers”
Not surprisingly, A2 Milk’s shareprice has remained strong through the latest market devastation, with shareholders comforted it is sitting on a cashpile of $600m.