Fisher and Paykel Healthcare reports its annual result on Wednesday.
Fisher and Paykel Healthcare reports its annual result on Wednesday.
Fisher and Paykel Healthcare’s strong earnings record looks set to continue when it reports this week, but new US tariffs have clouded the outlook.
While US President Donald Trump’s tariff regime is not as egregious for Fisher and Paykel Healthcare (FPH) as was first thought, it nevertheless complicates matters forthe company, which has substantial manufacturing facilities in Mexico.
In March, the US enacted a 25% tariff on products imported from Mexico that are not compliant with the US-Mexico-Canada Agreement (USMCA).
But it turns out that almost all FPH’s products imported into the US from Mexico are currently compliant with the USMCA.
However, there is still the issue of tariffs on products manufactured outside the US, including a 10% tariff on products made in New Zealand.
About 45% of FPH’s volume comes from Mexico and 55% from New Zealand. For the first half of the financial year, about 43% of FPH’s revenue came from the US.
Some 60% of the company’s US volumes are supplied from Mexico and 40% come from New Zealand.
At $21.1 billion, FPH is New Zealand’s biggest company by market capitalisation.
In early April, FPH said it did not expect any material impact from the tariffs on this Wednesday’s profit figure but that costs in 2026 were likely to increase as a result of them.
Brokers expect a strong result.
US President Donald Trump has unleashed a wave of trade tariffs. Photo / Washington Post
Forsyth Barr analysts expect FPH’s net profit to be near the top of the company’s guidance range of $320 million to $370m and modestly ahead of market consensus.
The broker sees a net profit of $368m for the March year, on revenue of just over $2b.
Further out, Forsyth Barr expects a $450m net profit in 2026 on turnover of $2.29b.
FPH’s homecare division provides respiratory products for people managing chronic conditions like obstructive sleep apnea (OSA).
The hospital division specialises in respiratory and acute care, with a focus on providing humidified respiratory support.
“We expect a strong period for Homecare revenue growth, supported by ongoing share gains,” Forsyth Barr said.
“Hospital sales will be boosted by a robust respiratory season – flu data was well ahead of last year but this was offset by weaker Covid and RSV hospitalisations,“ it said.
Forsyth Barr expects to hear some clarification over where FPH stands on the tariff front in Wednesday’s result.
Its forecasts incorporate a 10% New Zealand tariff only, bearing in mind the large majority of FPH’s Mexico manufacturing is USMCA-compliant.
“Should FPH’s NZ-manufactured products be exempt, this drives 3%–4% earnings per share upside to our forecasts, or 1.5% if Homecare products only are exempt," Fosyth Barr said.
“Our key focus areas at the result are: (1) tariff clarification and gross-margin outlook; (2) Homecare revenue performance and outlook – we are above consensus in FY25 and FY26; (3) hospital new apps (including anaesthesia performance).”
The broker remained confident that FPH would continue its market share gains in Homecare.
Craigs Investment Partners portfolio manager Mohandeep Singh told the Herald earlier this month that manufacturers worldwide would be anxious to see how the new US tariff regime will play out over the long run.
“Until there’s some sort of signal that this is a structural tariff that’s here to stay forever, and that this is the new world regardless of who’s in power in the US, then I think you might see FPH and other manufacturing companies look to make longer-term capital investment decisions,” Singh said.
While US sanctions will make their presence felt on FPH, there is some relief that it could have been worse.
“I suspect the rhetoric [at this Wednesday’s result] will be business as usual, keeping our options open and being flexible,” Singh said.
At $36 each, FPH’s shares are expensive, having firmed by 27% over the last 12 months.
The company’s earnings exploded on the back of the 2020 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, before returning to more normal levels.
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.
