Fisher and Paykel Healthcare managing director and chief executive Lewis Gradon. Photo / NZ Herald
Fisher and Paykel Healthcare expects its strong earnings growth to continue this year and for new US tariffs to have a minimal impact on future margins.
The company, New Zealand’s biggest by market capitalisation, this morning reported a 43% lift in its annual net profit to $377.2 million.
Turnover was a record $2.02 billion (up 14%).
The profit for the March year was over the company’s own forecast range of $320m to $370m, and was ahead of market expectations.
In its outlook for the year ahead, Fisher and Paykel Healthcare (FPH) said it expects operating revenue to be in a range of about $2.15b to $2.25b, and for its net profit to be about $390m to $440m.
FPH has two manufacturing bases in New Zealand and Mexico.
In March, the US enacted a 25% tariff on products imported from Mexico that were not compliant with the US-Mexico-Canada Agreement (USMCA).
Almost all FPH’s products imported into the US from Mexico are currently compliant with the USMCA, but there is still the issue of tariffs on products manufactured outside the US, including a 10% tariff on products made in New Zealand.
Chief financial officer Lyndal York said the company’s margin was 62.9% for the year. Excluding the product recall provision last year, that was an increase of 181 basis points over the previous year’s.
“If the current global tariffs remain in effect as they currently are, our growth margin would be impacted by approximately 75 basis points on an annualised basis and approximately 50 basis points impacting in the 2026 financial year,” she said.
“Our ongoing improvement efforts are anticipated to more than offset this to provide an overall growth margin improvement of approximately 50 basis points in constant currency terms in full year 2026,” York told a conference call.
The respiratory products maker has two businesses that specialise in serving hospitals and people at home with health issues.
For the hospital product group, which includes products used in respiratory, acute and surgical care, revenue for the full year was $1.28b, up 18% from the previous financial year.
For the homecare product group, which includes products used in the treatment of obstructive sleep apnea (OSA) and respiratory support in the home, revenue was $739.9m, up 13%. OSA masks revenue was up 14%.
Managing director and chief executive Lewis Gradon said FPH’s response to any trade policy developments was to mitigate cost increases through efficiency gains.
“Looking ahead, we will continue to apply the fundamental principles that have guided us for decades,” he said.
“We have a strong new product pipeline and are confident that we will continue to introduce innovative products and therapies that enhance patient care and improve health outcomes worldwide.”
About 45% of FPH’s volume comes from Mexico and 55% from New Zealand.
Forsyth Barr senior analyst Matt Montgomerie said it was a strong result, with gross margins and cashflow ahead of expectations, but he said the forecast for the current year was slightly below the broker’s expectations.
“The result was good and the mix within the result is good, but the revenue guidance may slightly disappoint some,” he said.
He added clarification on the impact of US tariffs on FPH’s margins was useful.
Montgomerie estimated the impact of tariffs on FPH’s gross profit this year would be about $11m.
“After the conference call, I think investors should probably walk away with a little bit more comfort that FPH will be heading towards the upper end of their guidance range that they’ve provided,” he said.
The company’s earnings rocketed higher during the Covid-19 virus, which attacks the respiratory system.
In the 2021 financial year, the company reported a record profit of $524m, followed by a $376m profit in 2022.
Montgomerie said today’s result was consistent with a return to business as usual.
“The pre-Covid FPH versus now is very similar in that the research and development machine is continuing to roll out new products and yes, they’re doing a good job.”
FPH announced a final dividend of 24c a share, taking the total dividend for the year to 42.5c per share, up 2%.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.