Fisher & Paykel Healthcare profit slips 2% as demand for breathing aids to treat Covid-19 slows

Thursday, 25 November 2021

Fisher and Paykel Healthcare posted a 2 per cent drop in first-half profit as demand slowed for its breathing aids used to treat Covid-19.

Net profit fell to $221.8 million in the six months to September 30, from $225.5m last year. Revenue slipped 1 per cent to $900m while expenses increased 5 per cent to $265.3m.

Fisher & Paykel Healthcare has experienced unprecedented demand for its breathing devices since early 2020 as hospitals stocked up on the machines and accessories used to help treat patients with the coronavirus. However growth has slowed as hospital admissions reduce and demand for stock stabilises.

“The first half of the last financial year was a period of extraordinary demand during the initial surges of Covid-19,” said managing director Lewis Gradon. “Our financial results in the first half of the 2022 financial year have continued to be very strong.”

Fisher & Paykel Healthcare’s first-half profit fell as demand for its breathing aids slowed.

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Due to uncertainty about the impact of Covid-19 in the future, the company would not provide revenue or earnings guidance for the remainder of the year, he said.

In the first half, revenue for the company’s hospital division, which includes products used in acute and chronic respiratory care and surgery, fell 2 per cent to $670m.

Fisher & Paykel Healthcare is expanding its manufacturing, with plans to invest $700 million in land and buildings over the next five years.

Gradon said hospital hardware sales would continue to be impacted by Covid-19-related hospital admissions in the second half of the company’s financial year. However, as many countries had already boosted their hospital treatment capacity, revenue was not expected to continue at an elevated level for the rest of the year, he said.

Sales of consumables for the hospital machines for the rest of the year were expected to be lower than in the same period last year when Covid-19 hospitalisations peaked in North America and most European countries, he said. However sales were expected to be higher than in the first half, he said.

Sales of the company’s homecare products, which are used to treat obstructive sleep apnea and provide respiratory support at home, edged up 0.3 per cent to $227m.

Demand for obstructive sleep apnea masks was dependent on new patient diagnosis rates, which may continue to be impacted by Covid-19 and the supply of treatment hardware, he said.

Still, for the remainder of the year, new patient diagnoses was expected to be at or above last year’s rates, he said.

Jarden research analyst Adrian Allbon said the result was better than he expected, with revenue 6 per cent higher than he forecast and profit 18 per cent higher.

Hardware sales were stronger than he expected while consumable and homecare revenues were in line, he said.

Fisher & Paykel’s gross profit margin of 63.1 per was up 135 basis points, as freight costs, while elevated, were less than expected, he said.

Shares in Fisher & Paykel Healthcare, which is the largest company listed on the NZX, rose 2.5 per cent to $32.99 in midday trading on Thursday, taking its market capitalisation above $19 billion.

Shareholders would be paid a first-half dividend of 17 cents a share, up from the 16c payment last year.

Gradon said the Covid-19 pandemic had seen more of its machines installed in hospitals and raised awareness of its therapies and products with physicians around the world.

“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,” he said.

Over the next five years Fisher & Paykel Healthcare expects to invest about $700m in land and buildings, including completing its fifth building at its Auckland campus and acquiring land for a second New Zealand campus, as well as adding an additional three manufacturing facilities outside New Zealand, the first of which is currently under construction in Tijuana, Mexico.

- Correction: Fisher & Paykel Healthcare will pay a first-half dividend of 17 cents. An earlier version of this story incorrectly said it was 76c. (Amended November 25, 2021, 12.21pm).