Fisher & Paykel share price on watch following FY21 trading update

The Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) share price could be on the move today, following the release of the company’s FY21 trading update.

Fisher & Paykel Healthcare is a leading designer, manufacturer and marketer of products and systems used for use in chronic and acute respiratory care, surgery and treatment of obstructive sleep apnea. The company’s products are sold worldwide. 

Trading update

Strong demand has continued for the company’s hospital respiratory care products due to the ongoing spread of the coronavirus pandemic around the world. 

For the first 4 months of the company’s financial year to the end of July 2020, hospital hardware sales have increased with 390% constant currency revenue growth compared to the prior comparable period (pcp). Additionally, hospital consumables revenue has grown 48% and overall hospital product group revenue has grown 91% compared to the pcp and in constant currency terms. 

Global sales of invasive ventilation and Optiflow consumables in July have returned to similar levels seen in April. Revenue in geographic areas is being impacted by the amount of infections. More than half of Fisher & Paykel’s Airvo (humidified high flow system) hardware sales are outside North America and Europe this financial year. 

Constant currency revenue growth in obstructive sleep apena (OSA) for the first 4 months of FY21 was 4% compared to pcp. The growth in home respiratory support is more than offsetting a decline in OSA flow generators. Homecare revenue growth is 5% in constant currency terms compared to the pcp.

Outlook

Significant uncertainty about the extent and duration of the impact of the coronavirus has led Fisher & Paykel to make some assumptions regarding its FY21 results.

The assumptions include global hospitalisations requiring respiratory support to steadily return normal by the end of the calendar year and countries around the world continue to build respiratory care infrastructure. Additionally, it is assuming sleep apnea diagnosis rates are reduced for the year and freight costs remain elevated, resulting in a 200 basis points reduction in gross margin in constant currency for the year.

 “On this basis and at current exchange rates, full year operating revenue for the 2021 financial year would be approximately NZ$1.61 billion and net profit after tax would be approximately NZ$365 million to NZ$385 million” said Managing Director and CEO Lewis Gradon.

About the Fisher & Paykel share price

In its FY20 results released to the market on 29 June 2020, operating revenue was NZ$1.26 billion and net profit after tax was NZ$287.3 million.

The Fisher & Paykel share price has been a major beneficiary from the demand for its products during the coronavirus pandemic. As a result, its share price has surged 111.42% in the past year and is currently trading at $31.84.

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Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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