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Is Fisher & Paykel Healthcare the next CSL?


Fisher & Paykel Healthcare (ASX: FPH) has released its FY20 full-year result for the 12 months to 31 March 2020.

What is Fisher & Paykel Healthcare?

Fisher & Paykel is a manufacturer, designer and marketer of products & systems for use in respiratory care, acute care and the treatment of obstructive sleep apnea. The company has been operating in the healthcare industry since the 60s. The healthcare business has been a separate entity since 2001 when the company split from its appliances business.

FY20 result

Fisher & Paykel generated NZ$1.26 billion of operating revenue, up 18% or 14% in constant currency.

  • The company said the increase in revenue was largely driven by growth in the use of the company’s Optiflow nasal high-flow therapy, demand for products to treat COVID-19 patients and strong hospital hardware sales throughout the year.

    Hospital products, which includes products used for respiratory, acute and surgical care, saw operating revenue growth of 25% to NZ$801.3 million for the year. Sales from new application consumables, which includes products used for nasal high flow therapy, increased by 23% in constant currency terms.

    The homecare product group saw revenue growth of 9% to NZ$457 million. This includes products used in the treatment of obstructive sleep apnea and respiratory support in a person’s home.

    Interestingly, the gross margin decreased by 0.73% to 66.1%, primarily driven by the additional air freight costs to get an increased supply of raw materials. There was also higher costs from the company’s second Mexico manufacturing facility.

    The company’s net profit after tax of NZ$287.3 million was up 37% compared to last year, or 30% in constant currency terms. Excluding the impacts from tax changes, being the R&D tax credit and building tax depreciation, net profit rose by 23% in constant currency. Still a solid effort.

    Balance sheet and dividend

    Fisher & Paykel is going to maintain its debt to the debt-plus-equity ratio in the range of +5% to -5%.

    The company said it expects to increase dividends as earnings grow after the directors increased its final dividend by 15% to NZ15.5 cents per share. This brings the total dividend for the year to 27.5 cents, an increase of 18%.

    FY21 Outlook

    Management said they can’t predict COVID-19’s impacts exactly, so the FY21 outlook is uncertain. For the first three months, its hospital product group saw hardware growth of over 300% while homecare growth for the first three months of FY21 has been closer to the FY20 full-year rate.

    Some costs, most significantly freight, remain elevated but the company hasn’t increased its product prices.

    On the expectation of COVID-19 peaking in the first quarter of its FY21, the company is guiding for FY21 operating revenue of NZ$1.48 billion and net profit of NZ$325 million to NZ$340 million. That would be revenue growth of 17.4% and profit growth of 13% to 18%.


    I think this was a solid result by Fisher & Paykel Healthcare. I wish I had invested a long time ago. That said, I’d be happy to invest, though the share price is up another 4% so shares certainly aren’t cheap today.

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