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Post Market Wrap | Fisher & Paykel FY22 Revenue Guidance Down By 14 Percent to $1.7B



This Post Market Wrap is presented by KOSEC – Kodari Securities

  • Lower COVID hospitalisation cases impacting revenue and operating margin
  • Higher freight costs also creating margin pressure 
  • Future revenue growth dependent on success of new products 
  • No earnings guidance given prevailing uncertainty around COVID-19 variants. 

Fisher & Paykel Healthcare (FPH or the Company) is a New Zealand based medical device manufacturer of products and systems for use in chronic respiratory care, surgery and the treatment of obstructive sleep apnea. The Company comprises 2 key business units, Homecare and Hospital. FPH designs, manufactures and sells its products in 120 countries worldwide.

FY22 revenue guidance

FPH expects full year operating revenue for the March 2022 financial year to be in the range of $1.675 billion to $1.7 billion. This compares to operating revenue of $1.97 billion generated for the full year ended 31 March 2021, a decline of 14 percent. 

The Company attributes the decline to lower respiratory intervention requirements of the current Omicron variant, as compared with the more severe Delta variant. The comparatively mild flu season in the Northern Hemisphere has also contributed to lower demand for hospital consumables. This follows a period of unprecedented demand for humidification products used in respiratory, acute and surgical care during FY21, when hospitalisations in response to COVID-19 case numbers were extraordinary. Hospitalisation numbers are critical to revenue growth because the Hospital product group accounts for approximately 75 percent of total operating revenue. 

The 63.1 percent operating margin earned in FY21 represented a decline of close to 3 percent compared to the previous financial year. Higher air freight utilisation and elevated freight rates were cited as reasons for this margin decline. This adverse trend has continued into the FY22 financial year with the operating margin expected to come in at about 62.5 percent. This compares to Fisher & Paykel’s long term gross margin target of 65 percent.

Looking Ahead

The flattening of the curve following the global surge in COVID-19 has tempered revenue growth while higher freight costs have compressed operating margins, in the current reporting period. The Hospital product group, which was the primary beneficiary of the COVID-19 hospitalisation surge, saw revenue in the FY21 financial year, ramp up by 87 percent to $1.5 billion. This revenue spike was sustained up to the period when the Delta variance was rampant around the world, especially in North America. 

Given subsequent lower hospitalisation rates, the Hospital product group is now focused on testing and trialing new products. The success of such products, including the Visairo mask for non-invasive ventilation in the US and the Evora full mask on NZ and Australia, will have a bearing on medium term revenue growth. R&D research is also a key factor in future revenue growth, with $75 million expended in the first half of the current financial year.     

Significantly, the FPH board has not committed to firm earnings guidance for the FY22 year. The prevailing uncertainty around COVID-19 variants, including the effectiveness of vaccinations, is impacting the number of COVID-19 related hospitalisations around the world. The lack of clear and definitive qualitative evidence is grounds for FPH in leaving earnings details to the release of full financial year results on Wednesday May 25. 

This Post Market Wrap is presented by Kodari Securities, written by Michael Kodari, CEO at KOSEC.

"Michael Kodari is one of the world's most consistent, top performing investor. A philanthropist and one of the prominent experts of the financial markets, he has been referred to as ‘the brightest 21st century entrepreneur in wealth management' by CNBC Asia and featured on Forbes. Featured on TV as the "Money Expert", on the weekly Sunday program "Elevator Pitch", he is recognised internationally by governments as he was the guest of honour for the event "Inside China's Future", chosen by the Chinese government from the funds management industry, attended by industry leaders, when they arrived in Sydney Australia, on April 2014. Michael and George Soros were the only two financiers in the world invited and chosen by the Chinese government to provide advice, and their expertise on Chinese government asset allocation offshore. With a strong background in funds management and stockbroking, Michael has worked with some of the most successful investors and consulted to leading financial institutions. He was the youngest person ever to appear on the expert panel for Fox, Sky News Business Channel at the age of 25 where he demonstrated his skillset across a 3 year period forming the most consistent track record and getting all his predictions right over that period. Michael writes for key financial publications, is regularly interviewed by various media and conducts conferences around the world."

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Musk’s Empire



A plane arrives in China. On board, one of the world’s richest men. He’s come to convince authorities that he should be allowed to set up a brand new factory.

He is Elon Musk.

And this is his first trip to China in three years.

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Amazon employees walk out to protest office policies



Staff at warehousing giant Amazon have walked off the job to protest the company’s return-to-office program

Over 1,900 Amazon employees pledged to protest globally over proposed changes to the company’s climate policy, layoffs and a return-to-office mandate.

The activist group behind the rally is known as Amazon Employees for Climate Justice (AECJ), who are seeking a greater voice for employees.

“Our goal is to change Amazon’s cost/benefit analysis on making harmful, unilateral decisions that are having an outsized impact on people of color, women, LGBTQ people, people with disabilities, and other vulnerable people,” organisers said.

Over 100 people gathered at the heart of Amazon’s Seattle headquarters on Wednesday. The company said it had not witnessed any other demonstrations.

AECJ said the walkout comes after Amazon made moves “in the wrong direction”.

The company recently has recently overturned a desire to make all Amazon shipments net zero for carbon emissions by 2030.

The company maintains a pledge on climate change.

Amazon spokesperson Brad Glasser told Reuters the company is pursuing a strategy to cut carbon emissions.

“For companies like ours who consume a lot of power, and have very substantial transportation, packaging, and physical building assets, it’ll take time to accomplish.”

AECJ protesters also sought support for the 27,000 staff, who had lost their jobs in recent months —around 9 per cent of Amazon’s global workforce.

The company has also mandated a return-to-office program.

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The Great Resignation vs. The Great Burnout



As employees recover from the height of the pandemic, the Great Resignation has come to light

The pandemic saw the term ‘the great resignation’ coined as thousands of people resigned from their jobs across the U.S. in 2021 and 2022.

Karin Reed, the author of ‘Suddenly Hybrid said the great resignation was a period of employees taking control of their future.

“A lot of people realised in their current environment they were not happy with what they were doing with their job. They chose to vote with their feet and go elsewhere,

In other parts of the world, a spike in resignations was not reported.

However, a higher degree of workers began reporting post-Covid burnout, as they made a return to the office.

“There’s been a blurring of the lines. You have work that’s not confined by a physical space.

“Instead of closing the computer and walk away, our computer is in the next room.”

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