F&P Healthcare H1 profit down 2%, beats market expectations

F&P Healthcare has beaten market expectations with its first half profit. Photo / Supplied

Respiratory products maker Fisher and Paykel Healthcare posted a 2 per cent decline in first-half profit to $222 million, driven by an equally slight drop in sales from its hospital group.

The result was ahead of market expectations and the share market reacted favourably to it, the stock gaining 50c or 1.5 per cent to $32.70 by mid-morning.

For the six months ended 30 September 2021, total operating revenue was $900 million -- down 1 per cent from the same period in the previous financial year or up 2 per cent in constant currency terms.

The market consensus for the company's revenue for the six months to September was $866 million, with a net profit of $200m, down from $910.2m and $225.5m, respectively, in the same year-ago period.

The company did not give a guidance for the rest of the financial year due to the uncertainties posed by the Covid-19 pandemic.

F&P Healthcare, at $18.1 billion, is the NZX's biggest company by market capitalisation.

About three quarters of its revenue comes from its hospital product group and a quarter from its homecare product group.

The company also outlined a $700 million capex programme.

Managing director and chief executive Lewis Gradon said that for two years now F&P Healthcare's customers had been dealing with the Covid-19 pandemic.

In F&P's Healthcare's Hospital product group, which includes humidification products used in respiratory, acute and surgical care, revenue for the first half was $670m.

Hospital consumables grew by 8 per cent in constant currency terms and of total hospital product group revenue, 67 per cent was from the sale of consumables and 33 per cent was from the sale of hardware.

In the homecare product group, which includes products used in the treatment of obstructive sleep apnea and respiratory support in the home, revenue was $227m, a 0.3 per cent increase over the prior comparable period, or 3 per cent in constant currency terms.

Gross margin was 63.1 per cent, up 135 basis points or 53 basis points in constant currency terms compared to the first half of the 2021 financial year.

Elevated freight costs and air freight utilisation continued but were lower than the same period last year, impacting gross margin by approximately 190 basis points compared to pre-Covid-19 levels.

F&P Healthcare set an interim dividend of 17 cents a share.

Over the next five years, F&P Healthcare expects to invest about $700m.

This included a fifth building completing its Auckland campus and acquiring land for a second New Zealand campus.

The company expects to add an additional three manufacturing facilities located outside New Zealand, the first of which is currently under construction in Tijuana, Mexico.

"Given the continuing uncertainties associated with Covid-19, including the impact on hospitalisations and public and civic responses to Covid-19 case numbers, the company is not providing quantitative revenue or earnings guidance for the remainder of the 2022 financial year," Gradon said.

"For the second half, we expect our Hospital hardware sales will continue to be impacted by Covid-19-related hospital admissions," Gradon said.

"However, as we said in our August trading update, many countries have already boosted their hospital treatment capacity, so we do not expect hospital hardware revenue to continue at an elevated level for the rest of the year," Gradon said.