Fisher & Paykel profit down 57%

Fisher & Paykel Healthcare’s first-half profit dropped 57% as demand slowed for its breathing aids used for Covid-19 patients.

Net profit fell to $95.9 million in the six months ended on September 30, the lowest level since the 2018 financial year and down from $221.8m last year.

The result was ahead of the company’s forecast of $85m to $95m for the period.

Fisher & Paykel experienced a surge in demand for its products during the pandemic, selling 10 years worth of devices in two years. Demand has now slowed as fewer patients require treatment, which has led profit to retreat to pre-pandemic levels.

Revenue slipped 23% to $690.6m but was ahead of the company’s $670m forecast.

‘‘Consistent with what we signalled in August, first-half revenue was down on the prior corresponding period as we lapped significant Covid-19-driven demand,’’ managing director Lewis Gradon said. ‘‘Compared to pre-pandemic levels, this represents solid growth.’’

During the pandemic, Fisher & Paykel sold its products to new countries, new hospitals and new areas within hospitals.

But demand for its breathing aids is now slowing, with revenue from its key hospital division – which includes humidification products used in respiratory, acute and surgical care – down 35% to $438.7m. Still, the company noted sales were up 24% on the comparable period in the 2020 financial year.

Some 87% of the hospital revenue was from the sale of consumables and accessories that connect to machines and have to be replaced regularly, while 13% of sales were of hardware.

Sales of homecare products, which are used to treat obstructive sleep apnoea and provide respiratory support at home, increased 10% to $249.9m.

Fisher & Paykel’s gross profit margin fell to 59.8%, down from 63.1% the previous year. It attributed the drop to higher freight costs and manufacturing inefficiencies because of demand fluctuations and higher rates of sicknessrelated absenteeism. The company expects the margin to improve in the second half.

Given uncertainty about Covid-19 factors and surgical backlogs in many countries, the company would not provide full-year revenue and profit forecasts at this time, Gradon said.

The company’s shares rose 5.6% to $21.87 each in late morning trading yesterday on the New Zealand stock exchange. The stock is down 32% so far this year.

The company will pay a 17.5c first-half dividend, up from 17c the year earlier, and will restart its dividend reinvestment plan.