Fisher & Paykel Healthcare gave guidance for 1H FY24 (6 months ending 30 September 2023). Note: figures are in NZD.

• Revenue Guidance = $790m
• NPAT Guidance = $95m-$105m

Full year revenue guidance was maintained at $1.7b

I think the market is a little disappointed with another fall in the net profit margins in this business. Assuming around $100m of NPAT, margins would be around 12.66%. Down from previous halves and also well down from historical average of around 20%. See my updated chart below:

The company is undergoing a period of investment so hopefully once this phase is over we will see the margin recover again.

Some milestones that were listed as being completed in the last 12 months:

• Acquired land for a 2nd NZ campus.
• Opened a 3rd building at their facility in Mexico.
• Began fitting out new manufacturing site in China.
• Increased the size of its sales force.
• Brought forward some R&D.
• Launched a new sleep apnoea device.

Disc: Held IRL and on Strawman.

Fisher & Paykel Healthcare gave a business update today.

FY23 (year end March 31) revenue guidance was given at $1.55-1.6b NZD (converting back to AUD is around $1.44-$1.48b).

Although guidance was not given at the 1HFY23 results this is higher than I expected and was fueled by an increase in covid-19 cases in China and an early start to the Flu season in North America which has increased hardware and consumable sales.

Assuming net margins of around 15%. NPAT for FY23 would be around $222m (top end of guidance).

The market has reacted well to this announcement although personally I feel that this situation is similar to 2020 and 2021 when there was a pull forward of sales as a result of covid. On a longer term basis, this increase in the short term may well just be a sugar hit to the revenue and not be sustainable.

If my assumptions are correct then the current share price represents a PE of over 60x. A bit rich for me to buy more shares but will happily hold on for now.

Will update my valuation shortly.

Full Announcement here

Disc: Held IRL and on Strawman.

FPH gave some revenue guidance for 1HFY23 last month. Note figures are in $NZD

• Revenue of $670m
• NPAT between $80m-$90m

No guidance for the FY23 was given but they did expect 2H to be stronger than first half.

I have graphed out the last 4 years of FPH including Revenue, NPAT and Net Margins below

In the trading update, management mentioned that Revenue has increased compared to pre-pandemic (1HFY20) levels however their guided NPAT shows that their net margins have decreased substantially.

If I assume that 2HFY22 Revenue would come in around $800m and net margins of around 15%, then full year profit would only be $210m. A significant decrease a back to levels around FY19. I do expect management to be able to turn this around and start their growth prospects again but something to watch in the coming few reports.

An announcement today relating to purchase of land to build another campus in NZ is likely to allow for further growth into the future.

Disc: Held IRL and on Strawman.