Covid-19 had a profound impact on Fisher and Paykel Healthcare Healthcare, says CEO

F&P Healthcare's earnings have returned to more normal levels on the back of reduced Covid infection. Photo / Supplied

It's business as usual for Fisher & Paykel Healthcare after two hectic, Covid-driven years.

The respiratory products maker said its net profit dropped by 28 per cent in the March year as earnings returned to more normal levels.

After an "unprecedented" 2021 financial year, the company's performance was again strong, with operating revenue 33 per cent above the pre-Covid 2020 financial year.

Total operating revenue for the 2022 year was $1.68 billion, down 15 per cent on the 2021 number.

The company's net profit after tax was $376.9 million, a 28 per cent decline from the previous financial year, or a 30 per cent decline in constant currency terms.

Managing director and chief executive Lewis Gradon said that over the past two years F&P Healthcare had supplied $880m of hospital hardware, the equivalent of about 10 years' hardware sales prior to Covid-19.

Covid infections are now in decline in most parts of the world, according to World Health Organisation data.

While F&P Healthcare's earnings have returned to earth, the impact of the Covid-19 on New Zealand's biggest company by market cap will be far-reaching.

"It has had a profound effect," Gradon told the Herald.

"We have got 10 years' worth of hospital hardware in place over two years," he said.

"That gives us an opportunity to bring everything forward that we have been thinking about."

F&P Healthcare chief executive Lewis Gradon. Photo / NZ Herald

That means investment in research and development, new products, clinical data, manufacturing and sales expansion, he said.

"That 10 years of hardware has been a global phenomenon, so it has expanded our global footprint as well," he said.

"That hardware generates consumables."

The company's products were in hot demand from hospitals all around the world in response to Covid-19, which attacks people's ability to breathe.

F&P Healthcare's share price rocketed up to a peak of $37.68 in August 2020 on the back of that demand.

It has since drifted back to more sedate levels, last trading at just over $21.

"The growing body of evidence supporting the use of nasal high flow and our other respiratory therapies shows that our products have a clear role to play in improving care and outcomes beyond Covid-19 patients," Gradon said.

On January 28, 2020, near the start of the pandemic, F&P Healthcare management held a crisis meeting.

Soon its facilities were running 24/7 to cope with demand.

"People felt very good about that effort," Gradon said.

"People felt like they were making a real contribution to the world.

"And how New Zealand managed that first year enabled us to do it."

F&P Healthcare did not issue any earnings guidance for the current year and said it still faced the by now familiar headwinds of higher raw materials costs, seafreight congestion and a lack of capacity.

After two tumultuous years, Gradon said it was back to business as usual.

"We are trying to accelerate research and development and sales expansion globally, but off a much higher base."

The total dividend for the year rose by 4 per cent to 39.5 cents.

Directors approved a profit-sharing payment totalling $19m for the year to be paid to employees who worked for the company for a qualifying period.

In the hospital product group, which includes humidification products used in respiratory, acute and surgical care, revenue was $1.21b, a decline of 19 per cent.

In the homecare product group, which includes products used in the treatment of obstructive sleep apnea (OSA) and respiratory support in the home, revenue was $469.5m, a 1 per cent increase over the previous financial year.

Gross margins fell by 59 basis points for the year to 62.6 per cent.

High air-freight use and elevated freight rates continued to weigh overall compared to pre-Covid-19 rates, impacting constant currency gross margin by about 240 basis points.