Stock of the month: Fisher & Paykel Healthcare
What does Fisher & Paykel Healthcare do?
Fisher & Paykel Healthcare (FPH) manufactures and sells medical devices and systems for use in acute and chronic respiratory care, surgery and in the treatment of obstructive sleep apnea. FPH manufactures their products at facilities in New Zealand (approximately 68%) and Mexico (approximately 32%) and sell these products in more than 120 countries worldwide. They market devices for both hospitals as well as homecare use.
Why is F&P Healthcare our Stock of the Month?
Fisher & Paykel Healthcare is our stock of the month due to their brilliant response to the Covid-19 pandemic. The company has now become the world’s largest manufacturer of two of the primary respiratory therapies used to treat patients admitted to hospital with Covid-19, Optiflow therapy and Nasal High Flow therapy. In January 2020 the company managed to identify the threat posed by Covid-19, long before the rest of the world including the World Health Organisation (WHO). Identifying the global pandemic threat posed by Covid-19 at such an early stage allowed the company to take the appropriate actions needed to be able to respond to the chaos and the inevitable surge in demand by hospitals for respiratory devices without putting additional strain on their manufacturing plants.
Anticipating this surge in demand, in January the company hired an additional 1500 factory workers (700 in Auckland and 800 in Mexico) and began to steadily increase the output of their hospital hardware products. Another thing that should be talked about is the high ethical standard the company has operated with during this pandemic. When most other companies would’ve increased their prices in line with costs in order to save the bottom line, FPH stood by the global community and did not increase their prices but rather chose to sacrifice some bottom line.
On August 21, 2020, at its annual shareholders’ meeting, FPH announced that the company has commenced planning for its third manufacturing facility in Mexico. The facility is set to be commissioned within the next two years.
1. Net profit after Tax (NPAT) of $287 million and Earnings Per Share (EPS) of 50 cents per share showed experienced growth of 37% from the previous corresponding period.
2. The company paid out a FY20 dividend of 27.50 cents per share to shareholders, up 18% on FY19.
3. Operating profit in FY20 was $379 million, up 30% from FY19.
4. The company expects that on this basis and at current exchange rates, full year operating revenue for the 2021 financial year would be approximately $1.61 billion and net profit after tax would be approximately $365 million to $385 million.