Fisher & Paykel Healthcare’s $880m sales of hospital hardware over the past two years deserves NZ’s plaudits

New Zealand’s biggest company by  capitalisation  on the  NZX, Fisher & Paykel Healthcare which  sells  its  products in  120  countries, has  supplied $880 million of hospital hardware over the past two years.  That’s the equivalent of about 10 years’ hardware sales before COVID-19.

This  remarkable performance deserves  the  plaudits  of  all New  Zealanders.

And  as a  company  which spends nearly  10%  of  its revenue  on research it has  new products coming  on the market.

CEO Lewis  Gradon  (surely he  deserves a knighthood) says the growing body of evidence supporting the use of nasal high flow and  other respiratory therapies shows that its products have a clear role to play in improving care and outcomes beyond COVID-19 patients.

“We have a proven fifty-year track record of changing clinical practice and now we have the additional benefit of customers already having our hardware and clinical experience with its use.”

Ports of Tauranga deserves plaudits for its performance in Covid-troubled times

The  latest Covid lockdown  has   delivered  a sharp  jab  to   many  NZ businesses, but  not what they had  been encouraged to think our wellbeing-focused government  was  planning  for them.   It  has  taken  the  gloss  off  what  might   otherwise have been regarded   as a  strong  reporting  season  for NZX-listed  companies.

The spike in coronavirus cases has led to NZ falling 26 places in Bloomberg’s Covid Resilience Rank.

We  had been the longest-running first-ranked country on the Bloomberg watch-list, since the inception   of the ranking  in November 2020. The plunge follows the spread of the Delta variant in Auckland and Wellington, which (when we checked yesterday) has resulted in 347 people testing positive for the virus across Auckland and Wellington.

Prime Minister Jacinda Ardern says lockdown is starting to work  and  she   insists   she is  acting   on  the  “best advice”  in  keeping  the  whole country  locked  down until  Wednesday,  when  there  will  be  a  slight  easing  with the  rest of  the  country  south of  Auckland moving  to level  3.

NZ is now ranked 29th on the Bloomberg ladder, two places above Australia which announced 1000 new cases on Thursday – Australia’s worst day of cases since the pandemic began.

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.

Two big announcements awaited from Fonterra – one deals with dairy payout, the other with the co-op’s capital structure

So what  are  the  chances Fonterra’s  payout  to its farmer-suppliers  could  top  $8kg/MS the  soon-to-end  current  season?

That would give a  timely  boost  to  the  rural economy  and give  farmers  the kind  of  surge  in incomes  which  would encourage them  to  step up the  pace  of  adapting their dairy farming practices as  the  country  moves  to meet its  climate  change goals.

In March, Fonterra raised its forecast milk price for this season to between $7.30 and $7.90kg/MS with a mid-point of $7.60. That was up from $7.14 last season.

But now, after several  good  results  from the fortnightly GDT auctions, and indications from futures contract prices, the  speculation  is that the payout  could go  higher.

While the GDT index slipped 0.7% at the latest auction this week, the price of whole milk powder, which has the most impact on what farmers are paid, gained 0.7% to an average US$4115 (NZ$5756) a tonne while skim milk powder, the second-most important, rose 2% to US$3433/t.

Butter prices slumped 12% to US$5035/t, weighed down by extra volume on offer.

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.

Making the most of it might be smarter than trying to fathom reasons for the NZX’s big bounce-back

Here’s a  conundrum:  thousands  of  New Zealanders   are  losing   their  jobs,  yet the  NZX top  50 index is  back  almost  to its  peak   of 12,065  it  hit  on  February 20.

Opposition  politicians  say  NZ is facing an economic disaster.  As  many as  150,000  jobs  could be  lost.  The  Reserve  Bank   believes unemployment  will rise to  9%.

The  sector which  was  the country’s biggest foreign exchange earner has been  shut  down. International education which brought  in  $5bn   has also gone down  the plughole. And   all  the government is   doing is  throwing  billions  at the  problem  in  wage subsidies.

Of  course  there is  relief that the country has succeeded in  quelling Covid-19  under the  leadership of  Jacinda  Ardern   (for  which   she is  admired  around the  world),  and has  moved to  alert level  one.

While some people are queuing for food parcels or the dole, others are prospering from NZX investments

A slight bounce in the economy is brightening the outlook as the country heads into the winter months, Radio  NZ  reports.

Retail spending is up and NZ shares rose on  Thursday for a third day running.  Key indicators have led some economists to point to a faster recovery than expected.

Finance   Minister  Grant   Robertson,  never  afraid  to  cite how  well  the economy has  done  under his  stewardship,   told  Parliament  earlier in the week:

“We are already seeing a significant lift in economic activity from moving from alert levels 3 and 2”.

Robertson reported  the  weekly   economic update from Treasury showed improvements in economic activity.

Heavy traffic movement is now only 5% below its normal levels, while electricity demand is now above pre-COVID levels, and electronic card spending during level 2 has been nearly equal to pre-COVID levels.

Updates from listed companies bring some economic comfort during the Covid-19 crisis

As  New Zealand   faces the  most brutal   recession in  living memory,  the  battle  to preserve   the core  of the  economy deepens.  Companies  are  cancelling  dividends  to protect what cash they have, others  are  reaching  for  financial  aid  from  their banks or  the government.

Yet for   some   businesses, notably  the  big  supermarket  chains,  the crisis  is accelerating    their  cash   flows.

Point of Order   has surveyed an array of   companies listed on  NZX, particularly in  several sectors—food  production, health and pharmaceutical  supplies, transport, agriculture  services—   which  have issued  updates. These should provide   comfort  to  their shareholders, and the market generally.

Latest  to  do so  is   King  Salmon,  the world’s largest aquaculture producer of the premium King salmon species.   Employing 500 people,  it operates  within the primary industry food producer category which has been included in the government’s list of essential services.

In its update to the  NZX, it  says :

Looking for a star? We have the Plexure of suggesting it might be found in the cloud

Is  Plexure  the  next rising  star  on the  NZX,  ready to  follow  the  trajectory  of  Xero?

It’s  a  mobile  marketing  company, using an intelligent technology platform  which powers customers’ mobile marketing  activities.  The platform incorporates Artificial Intelligence (AI) and Machine Learning (ML) features which augment Plexure’s capabilities in the areas of personalisation, advanced analytics and platform security.

Plexure’s trading performance has improved dramatically. Customer usage is at record levels and accelerating with 30m new users downloading its apps. This has driven revenues to a new high of $16.9m for the year ended  March 31, when  it had $7.3m in the bank.

Revenue guidance for   the current  year is in a range from $21m to $23m.  By comparison with the FY19 revenues of $16.9m, this represents a 24.3% rise at the lower end of the range and a 36.1% rise at the upper end of the range.

Forget about following the floundering fortunes of Fonterra – a2 Milk is the NZX’s fast-rising star

New Zealand  eyes  have been so  focussed  this  week  on  an event  20,000kms distant   that they  might  not have  noticed here  at  home another  extraordinary  event, taking  place  on the  NZX.

The market capitalisation of a company  which listed   as recently  as  2012  on the local sharemarket soared  past the  $12bn  mark and is hard on the heels of  Meridian Energy,  which has the  highest   valuation  of  NZ-based companies on the NZX  at $12.3bn.

The  challenger is a2 Milk,  which sells a  specialised  type of  milk  with what  it claims are health benefits.

A2 has had  a  chequered  history  but  its  market  valuation  keeps  climbing,  racing  ahead   of  blue chips  like  Auckland International  Airport  and  Fisher  & Paykel  Healthcare  and  leaving  in its dust some one-time  market  darlings  like Fletcher  Buildings  (market cap  $4.3bn)  and   Spark  ($7.2bn).