Fisher & Paykel Healthcare expects sharp decline in first-half earnings, stock tumble
F&P Healthcare expects earnings to return to near pre-Covid levels in the first half. Picture / File
Fisher & Paykel Healthcare stock price fell after the company said its profit for the first half through September would drop sharply from the same period a year ago, when demand was extraordinarily high in due to the Covid-19 pandemic.
By late morning, the stock was at $19.59, down $1.56 or 7.4% at Thursday’s close, and from its record high of $37.68 set in August 2020.
The respiratory products maker said its first-half operating revenue would be around $670 million, down from $900 million in the prior comparable period, and net profit would fall to $85 million to $95 million. dollars versus $222 million.
The revenue forecast would represent an increase from the pre-pandemic level of $570.9 million reached in the first half of 2020.
In its latest annual results announcement, F&P Healthcare detailed how it had significantly increased production in response to the Covid-19 pandemic.
“As a result, we’ve sold about 10 years of equipment in two years – to hospitals around the world,” said Chief Executive and Managing Director Lewis Gradon.
Gradon said that with the more recent waves of the Omicron variant, fewer patients have required hospitalization and respiratory support.
“We believe that customer inventory levels have been high in our first half, which is impacting our sales in the near term.
“It does not change the fundamentals of our business or our strategy.”
Gross margin for the first half is expected to be around 60%, below the company’s long-term target of 65%.
“The pandemic continues to negatively impact gross margin due to high freight costs and Covid-19,” Gradon said.
“This year we are also experiencing some manufacturing inefficiencies as we carefully balance demand fluctuations and targeted inventory levels with manufacturing throughput – while managing higher absenteeism rates within our workforce. manufacturing work due to illness.
“Although we have reduced our manufacturing cost base over the past six months, manufacturing inefficiencies are expected to persist this fiscal year as demand stabilizes and inventory levels reduce to our targets.”
Operating expenses for the first half are expected to increase approximately 5 percent in constant currency terms.
“There are ongoing uncertainties regarding our customers’ inventory levels, their staffing issues and their current ability to adopt clinical changes. We also don’t know to what extent respiratory therapies will be needed during the Northern Hemisphere winter,” Gradon said.
“For these reasons, we are not currently providing quantitative guidance on revenue or earnings for the full year 2023.”
However, Gradon estimated that revenue for the second half of fiscal 2023 would be higher than the first half.