Lending Association

FPH upgrades earnings guidance driven by currency rate movements

Good news and bad news on Friday from NZ-based Fisher and Paykel Healthcare.

Ahead of the March 31 end to its financial year, the company has revealed an upgrade to guidance but it also disclosed that it is facing a hit from a potential fall in property values (which will be a non-cash item in the results).

The company told exchanges on both sides of the Tasman that it had lifted its revenue and earnings outlook for the about to finish financial year.

The company said its full year guidance previously provided on November 29 last year was based on a “NZ:US exchange rate of 58 cents, was for operating revenue to be approximately $1.7 billion and net profit after tax to be in the range of approximately $250 million to $260 million.”

“Now, assuming a NZ:US exchange rate of approximately 61 cents for the balance of the financial year, the company expects full year operating revenue to be approximately $1.73 billion and underlying profit after tax (excluding any fair value changes) to be in the range of approximately $260 million to $265 million< the company explained on Friday.

“In the Hospital product group, there has been a continuation of solid demand for our hospital consumables across the product portfolio throughout the second half, which is towards the upper end of our expectations from November,” according to CEO, Lewis Gradon.

““In OSA masks, we have continued to see strong performance from our Evora Full mask. We have received positive feedback on our revolutionary F&P Solo mask after the recent release in early markets, and we look forward to its introduction in more countries in the coming months.”

But Fisher and Paykel also warned however that its property valuations are likely to be impaired – with the extent of the impact on 2024 earnings unknown at this stage.

“The company will shortly be commencing a scheduled valuation of the properties that it owns in East Tmaki and Karaka, Auckland and in Tijuana, Mexico as at 31 March 2024.

“In preliminary discussions we have been advised that the higher interest rate environment and current zoning status of our land in Karaka will likely have an adverse impact on the Karaka property valuation.

“Any reduction in the value of the Karaka land would be recognised as a non-cash accounting adjustment in the income statement and will impact our reported net profit after tax for the year. The quantum of any potential reduction in value is currently unknown, and our FY24 earnings guidance excludes this non-cash effect,” he said.

“Asset valuations will be undertaken by independent valuers, are subject to final audit and will be confirmed in the financial results for the year ending 31 March 2024, expected to be announced on 29 May 2024.

“Development of the new campus will occur over the next 30 to 40 years. We expect to submit our application for re-zoning of the Karaka land next financial year and the approvals to be granted over the coming years, Grasdon added.