F&P Healthcare's earnings upgrade would end up being conervative. Photo / NZ Herald
F&P Healthcare's earnings upgrade would end up being conervative. Photo / NZ Herald
Fisher and Paykel Healthcare expects its earnings to swell by almost $100 million this year due to increased demand for its products arising from the Covid-19 pandemic, but could that end up being too conservative?
In an earnings update, F&P Healthcare, which specialises in respiratory products, said it expects itsfull year revenue to come in at about $1.61 billion and for its net profit to lift to about $364m to $385m in the current year.
The company's most recent profit for the year to March came to $287m, on revenue of $1.26b.
In the first four months of the financial year to the end of July, strong demand for the company's hospital care products continued to track the spread of Covid-19 around the world.
F&P Healthcare said that reflected a changing trend in clinical practice in favour of nasal high-flow therapy for treatment of Covid-19 patients in hospital.
"Hospital hardware sales have continued to steadily increase over the first four months of 2021, with 390 per cent constant currency revenue growth to the end of July compared to the prior comparable period," it said.
"Including a very strong finish to the first quarter, for the first four months of FY21 Hospital consumables revenue has grown 48 per cent, and overall hospital product group revenue has grown 91 per cent, compared to the prior comparable period and in constant currency terms."
In a previous update in late June, F&P Healthcare said its hospital product group growth had continued to accelerate - by more than 300 per cent in the first quarter alone. Hospital consumables sales were up by a third at that point.
Sam Dickie, senior portfolio manager at Fisher Funds, which has a stake of just under 2 per cent in the F&P Healthcare, said the market was expecting to see an earnings upgrade but not of the order seen in its latest announcement.
"The upgrade at the revenue and profit line was quite powerful - the acceleration has been quite extraordinary," he said.
Fisher & Paykel Healthcare chief executive Lewis Gradon. Photo / Dean Purcell
He pointed to growth seen since the June update.
"Now, after four months, their numbers are 390 per cent and 48 per cent, which implies that the acceleration has been just massive," he said.
"What we know for certain is that this company has a track record of under-promising and over-delivering.
"I do think that there is further upside still," Dickie said.
The Covid-19 pandemic meant that F&P Healthcare's hardware was in more hospitals around the world than ever before.
Demand for the consumables required as time progressed meant there would be a "long tail" to that growth.
F&P Healthcare said its updated guidance assumes that global hospitalisations requiring respiratory support steadily return to normal by the end of this calendar year.
"It also assumes that countries around the world continue to build respiratory care infrastructure, including inventory of established ICU ventilators requiring our humidifiers, and that the trend toward nasal high flow as a preferred frontline therapy continues for both Covid and non-Covid patients."
F&P Healthcare designs, makes and markets products and systems for use in chronic and acute respiratory care, surgery and the treatment of obstructive sleep apnea.
Shares in F&P Healthcare - the market's biggest by capitalisation - last traded at $36.60 - up $1.60 or 4.5 per cent, having risen by 116 per cent over the last 12 months.
The company is due to hold its annual meeting on Friday.
