Many in retirement are travelling comfortably, with three key factors contributing to their happiness – good physical and mental health and enough money to enjoy life.
Perhaps the assumption that markets are still anchored by predictable economic policies needs to be challenged. For the first time since the fall of the Berlin Wall, political volatility – once background noise – is potentially reshaping investment risk at a structural level.
Fisher & Paykel in rude health, no thanks to the White House
For Fisher & Paykel Healthcare (ASX:FPH), it was all going so swimmingly. A strong first half saw the New Zealand-based medical-device maker post a stellar 18 per cent jump in operating revenue to $NZ951 million ($865 million) for the six months to September 30, 2024, while net profit after tax (NPAT) rocketed 43 per cent to $NZ153 million ($139 million) compared with the corresponding period last year.
Little wonder managing director and chief executive officer Lewis Gradon was upbeat when looking to the full-year results, predicting operating revenue to come in between $NZ1.9 ($1.73 billion) and $NZ2 billion ($1.82 million) and NPAT to be between $NZ320 million ($291 million) and $NZ370 million ($336 million).
Gradon was not alone. Shareholders, who enjoyed a three per cent boost in the interim dividend to 18.5 NZ cents (16.8 AU cents) a share, have been liking the earnings medicine that Fisher & Paykel has been serving up.
Up to mid-January, the stock has been rolling along, having risen nearly 60 per cent in the previous 12 months – a stellar performance.
Then along came President Donald Trump and his February 2 announcement that the US would impose a 25 per cent tariff on products imported from Mexico and Canada, and a 10 per cent tariff on products imported from China, all taking effect on February 4.
For Fisher & Paykel, it was a body blow. It manufactures about 45 per cent of its volume in Mexico, the US southern neighbour accounted for 43 per cent of revenue in the first half and about 60 per cent of US volumes are supplied from its Mexican manufacturing plants.
Gradon put the best possible spin on it. “The company takes a long-term view and will be working with global suppliers and US customers to provide solutions to best mitigate the impact of the tariffs on all parties.” He was helped when the White House announced a truce by postponing the tariffs until March 4 – but that only proved a temporary reprieve.
Meanwhile, shareholders, no different to investors globally who have been spooked by the economic nostrums emanating from the White House, decided to take some profits, with the share price falling since Trump’s announcement by 12 per cent, to close on Tuesday at $30.98.
For Gradon and the board it must be extremely frustrating to have the company humming along to a strong full-year result to March 31, 2025, only to be pushed off course by the economic idiocy of the US government.
Make no mistake. Fisher & Paykel is in rude health, as the interim results highlighted, with Gradon attributing the remarkable growth to innovative product launches and evolving clinical practices.
The company’s hospital products division, encompassing humidification products for respiratory, acute and surgical care, recorded first-half revenue growth of 21 per cent to NZ$591 million ($537 million), with a standout performer being new hospital applications consumables.
The homecare product segment, which includes masks and accessories for obstructive sleep apnoea treatment, also delivered solid results with record revenue of NZ$359 million ($336 million), marking a 14 per cent increase year-on-year.
The gross margin improved to 62 per cent, representing a 141 basis-point increase in reported currency compared with the previous corresponding period, reflecting ongoing advancements in its continuous improvement initiatives and overhead efficiency, bringing the firm closer to its target of 65 per cent gross margin.
Looking forward, the company anticipates similar contributions from clinical practice changes and new product introductions, while for the homecare segment, it’s upbeat about the performance of three new mask models launched in major markets over the past year, expressing confidence they will continue to drive comparable results for the rest of the financial year.
Fisher & Paykel continues to invest significantly in research and development, which accounted for 12 per cent of operating revenue at NZ$110 million ($100 million) for the half-year, resulting in several new products, including the F&P 950 humidification system and the Airvo 3 in the US, as well as new mask offerings such as F&P Nova Micro and F&P Solo.
