Preview: What to expect from F&P Healthcares first-half result

Fisher and Paykel Healthcare – the respiratory products maker at the sharp end of the Covid-19 response in hospitals around the world – is this week expected to post a slight reduction in its first half earnings, but they will remain extraordinarily high.

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

While it will be a strong first half, relative to history, the market’s attention will be on what lies ahead as more countries come to grips with Covid-19 and as vaccination programmes continue to roll out.

“The key swing factor will be hospital segment performance and F&P Healthcare’s outlook for the rest of the year,” Salt Funds managing director Matt Goodson said.

F&P Healthcare, which at $18.1 billion is the NZX’s biggest company by market capitalisation, said in a market update in August that revenue in the first four months of its financial year was $583m, with 74 per cent of that coming from the its hospital product group and 26 per cent from its homecare product group.

In constant currency terms, revenue for the four months was 2 per cent below the prior comparable period, which was a period of high demand during the initial surges of Covid-19 in North America and Europe.

Forsyth Barr, in a research note said: “We expect to see the first signs of the earnings decline when F&P Healthcare reports its first-half result on Thursday.

“Our key focus areas are; (1) any insights into the remainder of full-year 2022 and the demand profile post Covid-19,(2) gross margins and the impact from increased freight costs, and (3) selling, general, and administrative expenses (SG&A) cost control in light of likely declining revenue.

“While we don’t expect quantitative guidance we look for any insights into expectations for the remainder of 2021 and the demand profile thereafter,” Forsyth Barr said.

America’s ResMed, which like F&P Healthcare makes devices for the treatment of sleep apnea, last month reported a 20 per cent lift in first-quarter revenue to US$904m ($1.3b), with net income rising 14 per cent to US$204m.

In the same space, Netherlands-based Philips in June announced a €250m ($404m) global product recall after discovering a fault in its “DreamStation” sleep offering.

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