Fisher  and  Paykel  Healthcare puts pep back into the sharemarket

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.

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