Fisher and Paykel Healthcare startled the sharemarket out of its lethargy this week when it reported a half-year profit of $221.8m on revenue of over $900m. The company again dazzled market analysts, who had been expecting revenue to fall after the record achieved in the previous 12 months, largely through the provision of medical equipment for hospitals to combat Covid.
The Auckland-based company has become the flag-bearer for the hi-tech sector in NZ and has signalled further growth, announcing that over the next five years it expects to invest $700m in land and buildings. This includes a fifth building, completing its Auckland campus, and acquiring land for a second NZ campus.
Over the next five years the company expects to add an additional three manufacturing facilities located outside NZ, the first of which is currently under construction in Tijuana, Mexico.
What sets F&P Healthcare apart from most NZ firms is its investment in R&D which in this half year was 8% of revenue, or $75.7m.
The half-year announcement sent investors piling back into the stock, which bounced up 5%.
The company’s market capitalisation is creeping back close to $20 billion.
Managing director Lewis Gradon noted that the first half of the last financial year was a period of extraordinary demand during the initial surges of COVID-19. He said the 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 $670m, a decline of 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.
In the Homecare product group which includes products used in the treatment of obstructive sleep apnea (OSA) and respiratory support in the home, revenue was $227m, a 0.3% increase over the previous comparable period, or 3% in constant currency.
Gross margin was 63.1%, up 135 basis points or 53 basis points in constant currency compared with the first half of the 2021 financial year.
Elevated freight costs and air freight utilisation continued but were lower than the same period last year, impacting gross margin by about 190 basis points compared with pre-COVID-19 levels.
“The longer-term impact from Covid for our business has been a larger installed base of our hospital hardware and increased global physician awareness and experience with our therapies and products. To ensure we are well-positioned to meet demand for the ongoing use of this installed base of hardware and accommodate our strong new product pipeline, we are continuing to invest in our infrastructure to ensure it supports our long-term growth,” Gradon said.
“For the second half, we expect our Hospital hardware sales will continue to be impacted by Covid-19-related hospital admissions. However, 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 hospitalisations around the world,and the severity of the flu season during the Northern Hemisphere winter”.
Staff may be expecting a bonus, in the light of the latest result, like the one they received after last year’s record result.
Point of Order 