Fisher & Paykel Healthcare profits up 37% on back of Covid-19

Monday, 29 June 2020

Fisher & Paykel Healthcare – New Zealand's most valuable firm – saw its market value jump to more than $19 billion on the NZX after posting a record profit on the back of the coronavirus pandemic.

The company posted a 37 per cent rise in its annual profit to $287 million for the year to the end of March, with revenues from the sales of its breathing aids rising 18 per cent to $1.26b.

Fisher & Paykel Healthcare does not make mechanical ventilators with tubes that are inserted down patients' throats, instead making a range of non-invasive breathing aids and masks that are designed to be used in hospitals and also at home.

Chief executive Lewis Gradon said nasal 'high flow' therapy, and in particular Fisher & Paykel's Optiflow system, had 'steadly gained acceptance as the preferred front line therapy for Covid-19 patients'.

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'Demand for our hardware has pretty much followed Covid around the world,' he said.

'It started in China, moved to Europe, moved to the US and now we are seeing more and more from other countries such as Brazil and Russia.'

The company was already New Zealand's most valuable firm, with a market value of just over $18b on the NZX, prior to its profit result on Monday.

Its share price rose 4.7 per cent to close at $33.50, valuing the company at $19.2b.

That means its value makes up 12 per cent of the combined value of all the 179 stocks on the NZX's main board.

Sales of its breathing aids in the year to the end of March were boosted by the coronavirus pandemic, but the bigger impact may be in its new financial year, with the company forecasting another big jump in its sales and profits.

Gradon said it was already on track to deliver strong growth during the year to the end of March 2020, before the coronavirus 'impacted sales'.

“Beginning in January, the demand for our respiratory humidifiers accelerated in a way that has been unprecedented,” he said.

“With new processes, new procedures and new ways of working safely, we managed to double and in some instances triple, output for some of our hospital hardware products over just a few months at the end of the year,' he said.

Despite the intense demand for its products and 'elevated' freight costs, Gradon said Fisher & Paykel Healthcare had not increased its prices.

'We value a long term relationship with our customers.

'I’m incredibly proud of our people and their unyielding commitment to doing the right thing for patients,” he said.

The company's future opportunity would be to 'translate visible benefits of Optiflow therapy for Covid patients to respiratory patients in general' and then to demonstrate how those benefits could be applied to patients in the home, he said.

The Auckland-based firm employs 5000 staff, mostly in New Zealand and in Mexico, where it has manufacturing plants.

It has no connection any more with whiteware manufacturer Fisher & Paykel Appliances which is now Chinese-owned.

Gradon said Fisher & Paykel Healthcare's performance in the year to March next year was hard to forecast.

But the company has pencilled in a profit of $325m to $340m.

That is based on an assumption that global hospitalisations caused by Covid-19 peak before the end of June and hospitalisations for respiratory-related illnesses steadily return to normal by the end of September.

That was not a prediction about the path of the virus and it was a 'safe assumption' that forecast would be higher if hospitalisations from Covid climbed, or remained the same, after the end of June, he said.

'We are continuing to grow manufacturing capacity of hospital products during our 2021 financial year to ensure a further increase in supply of our respiratory products is available if required.'

The company declared a final dividend of 15.5c a share, which took its annual distribution to 27.5c – up 18 per cent on last year.