Investors respond perversely to F&P Healthcare’s record profit and booming sales – but staff will benefit from the cheering result

Auckland-based medical equipment manufacturer Fisher & Paykel Healthcare has posted a record full-year result, as the pandemic drove unprecedented demand for its products.

Its net profit for the year to March rocketed 82%  to $524m, as sales increased by more than half to $1.97bn.

It  is proving  one of the  country’s  most successful business enterprises.

But even  its  founders, including  the  legendary Sir  Woolf  Fisher,  would have been astonished  at its  latest  remarkable  performance.

Led  by  its  outstanding CEO, Lewis Gradon, the  company’s  latest result  was driven by an 87% increase in sales of its hospital products, including its Optiflow and Aviro systems, which have proven to be effective in treating people who have Covid-19.

Sales of its hospital hardware and consumables  continued to track Covid-19 hospitalisation surges in countries around the world.

The pandemic had also accelerated the company’s expansion into different global markets, with significant growth in the North America, Europe, Asia Pacific regions.

The strength of the result saw the company look to reward all of its staff with a profit-sharing bonus of $29m.

The bid for Infratil from Australian Super was a fizzer – and now we can see why that’s been great for shareholders and NZ

One  of  the  busiest  companies  on  the  NZX,  investment company Infratil,  has  underlined that  not  all  of the  sharpest  operators in NZ business have  deserted Wellington   for  the brighter  lights  of  Auckland.

This  week  the  company  announced it has executed a conditional agreement to acquire between 50.1% and 60% of Pacific Radiology Group, a comprehensive diagnostic imaging business,  from its existing doctor shareholders for a total consideration of up to $350m.

Pacific Radiology is the largest private diagnostic imaging service provider in NZ, operating 46 clinics in the South Island and lower North Island and employing 90 radiologists.

The acquisition enterprise value of $867m implies an EV/EBITDA multiple of 12.6-13.3x.

Infratil chief executive Jason Boyes says the Pacific Radiology acquisition, if completed, will sit well with Infratil’s other high-performing, high-quality assets, and builds on its investment last year in Qscan Group, a leading diagnostic imaging business in Australia.

Covid-19 has helped Kiwi tech companies – but could they become our biggest export sector?

Technology  is  leading  NZ’s  economic  growth and  the  tech   sector could be on track   to  become the  country’s  biggest   export  industry, according  to some  familiar with the  breadth  of the industry here.

Not  surprisingly,  perhaps, Covid-19 travel restrictions levelled the playing field for Kiwi tech companies as companies around the world were forced to communicate online.

Authorities  within  the  sector  say  companies  in the   industry  have been growing faster than ever and profitability which grew three-fold between 2018 and 2019, according to the Ministry of Business, Innovation and Employment (MBIE), is still  accelerating.

Again, Covid-19  has   been  a  factor,  particularly  for Fisher  and  Paykel  Healthcare,  whose  technology   has been  in  heavy demand.,  as a  result of  the  pandemic.

Firms wanting to use te reo in their branding should check with Te Hamua Nikora as well as IPONZ

Learning Māori is first and foremost about having fun, according to Precious Clark, director of Maurea Consulting LTD, in a Newshub report on learning te reo Maori and embracing tikanga.

“It’s about giving people the tools so they can pronounce our words correctly and it’s about giving them the confidence to give it a go,” she said.

But getting it right isn’t always easy,  Newshub’s Mike McRoberts pointed out.

His report recalled the recent experience of a Canadian brewery which apologised after making a beer with New Zealand hops which it called the Pale Ale Huruhuru.

“The strict translation means feather, but it’s more commonly used to describe pubic hair. 

“After being called out by language watchdog Te Hamua Nikora, the brewery apologised.”

The beer company wasn’t alone.  A leather shop in Wellington apologised, too, after coming under fire for unwittingly taking its name from the Māori word “huruhuru”.

Yes, you can win IPONZ approval for your branding but it’s back to the drawing board if some Māori mount an offensive against you

The makers of the gin once branded “indiginous”  announced early in June they were back in business and their product – now known as “imagination” – was available again, in stores and online.

Since then their Facebook page has recorded that whatever it’s called, the hand-crafted gin they make in the Reikorangi Valley, near Waikanae, has gone down a treat with the experts. They were awarded a silver medal and the highest score for a New Zealand gin at the London Spirits Competition; a gold, a silver and two bronze medals at the New Zealand Spirits Awards; and a bronze medal at the International Wine & Spirit Competition in the UK.

The most recent post, on August 18, advised:   

“A very satisfying way to end the medal season! We won our very first medal with our very first gin at the 2019 SIP Awards in the USA, and we’ve gone back to back with another Gold medal for our Triple Distilled Dry Gin for 2020.”

Another of their gins picked up Silver. 

But it has been a harrowing year.

Faafoi is far from helpful when asked how business people can avoid being accused of causing cultural offence

The makers of Indiginous gin had a sobering experience after getting the approvals they thought they required from this country’s trade marking and branding authorities.  Their brand name was approved and they went to market with the gin they make at Reikorangi Valley on the Kapiti Coast, only to be intimidated into rebranding and remarketing their product by people who barraged them and their retail outlets with a campaign of abuse and threats.

The owners of a Wellington shop which called itself Huruhuru were reported to have been similarly bombarded with abuse and threats after it emerged the name of their business could mean pubic hair.

The owners of the shop, Aynur and Ercan Karakoc, said they had wanted a name to represent New Zealand and had gone through the proper process without any issues arising.  They say the brand name was approved by IPONZ’s Māori Advisory Committee and they assumed therefore it would not be offensive.

Thus the principals of two businesses – at least – have been harassed and accused of causing cultural offence despite seeking the proper authorisations from the Intellectual Property Office of New Zealand (IPONZ) and consulting its Maori Advisory Committee.

It’s the beta-casein and premium product that makes a big difference between a2 Milk and Fonterra

Investors  this week took  the  phenomenal result  for a2 Milk   in  their  stride, but  it  may have produced  a few blinks  round   the   nation’s  dairy farms,  particularly  with  the  farmer-suppliers  of  Fonterra. 

Take – for example – a2 Milk’s  earnings  per share  of  52.39c  and contrast them with Fonterra’s 17c per share  in 2019,  or  its  net  profit  of $385.8m   versus  Fonterra’s loss  of $605m.

There  are  other  mind-blowing  figures  from  a2 Milk: total revenue  of  $1.73bn, up  32.8%; ebitda of $549.7m, a  rise of 32.9%;  and operating cash flow of $427.4m. Not to  mention  a  cash  mountain  it has  built up of  $854.2m.

As  one commentator has  put it, a2 Milk with its record growth intrinsically linked to the China market, is a success story   New Zealanders should both celebrate and learn from.

Even  its  Dunedin founders through its  early  years  from 2000,  Dr  Corrin McLachlan  and  Howard  Paterson, might be  astonished  at  its  latest  result.

F&P Healthcare’s increased profit shows Covid-19 has a bright side (for some) but big spending on R&D pays off, too

Covid-19  is  a  disaster   for the US, and  for many other countries — but  it has sent revenues  for Auckland-based F&P Healthcare soaring.  Investors in the  company  were  ecstatic  this  week   when the    company  posted  a  boomer  profit of   $287m  and  forecast  an even better  one  in the current year.  The share price has soared 102%  in the  past 12  months.

It’s  a  performance  the  country as  a  whole  should  celebrate,  for  more than  80% of the  revenue  is  in  US  dollars.

Operating revenue was $1.26bn, up 18% over last year.  Net profit rose 37% over the previous year.

The increase in revenue was largely driven by growth in the use of the company’s OptiflowTM nasal high flow therapy, demand for products to treat Covid-19 patients, and strong hospital hardware sales throughout the year.

How a crash (of sorts) might come

History looks for a trigger for the economy crashing:  the 1929 stock market panic, the 1970s oil shock or the 2008 subprime meltdown.  But while the headline events can be a catalyst, sober analysis usually gives a more complex backstory of growing economic imbalances and disastrous-with-hindsight policy settings.

So casting the Covid shock as the proximate cause, what might be underlying drivers of a sustained deterioration in the economic climate?

A2 Milk continues to experience strong revenue growth as consumers change behaviour

At  a  time  when  the  Covid-19 pandemic  is wreaking  havoc on lives and livelihoods,   and  sage   economists are telling us  the economic slump underway is “truly enormous”,  it is   almost  impossible   to  find   any  chinks of  light in  the encircling gloom.

ANZ economists  say the  pandemic has

 “  … stopped the global  economy   in its tracks  and the impacts of this crisis will be with us in months and years to come”.

Not  good  news  for  an  economy  which  is  already  feeling the effects of the  crash of  two  its  main export-earning  props.

But, wait,  what  about  the  bulletin   from    A2  Milk  on  Wednesday?

The company  which last provided  an update on  its trading performance on  February 27 reported  that, since then,  it has continued to experience strong revenue growth across all key regions, particularly for infant nutrition products sold in China and Australia.

“We are now able to confirm that our revenue for the three months to  March 31 (3Q20) was above expectations. This primarily reflected the impact of changes in consumer purchase behaviour arising from the Covid-19 situation and included an increase in pantry stocking of our products particularly via online and reseller channels. We are unable to estimate the timing and extent to which pantry stocking may unwind.