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Fisher & Paykel Healthcare (ASX:FPH) share price jumps 6% on solid FY24 result, FY25 guidance

The Fisher & Paykel Healthcare Corporation Ltd (ASX: FPH) share price has soared 6% in response to the FY24 result.

This company designs, manufactures and sells products and systems used in acute and chronic respiratory care, surgery and the treatment of obstructive sleep apnea (OSA). Its products are sold in over 120 countries.

FY24 result

Here are some of the highlights for the 12 months to 31 March 2024:

  • Operating revenue grew 10% to $1.74 billion
  • Gross profit increased 11% to $1.04 billion
  • Underlying net profit after tax (NPAT) grew by 6% to $264.4 million
  • Reported NPAT sank 47% to $132.6 million
  • Final dividend increased by 2% to 23.5 cents per share
  • Total dividend grew 2% to 41.5 cents per share

The ASX healthcare share reported 6% growth of hospital operating revenue to $1.1 billion and 18% growth of homecare operating revenue, with 21% growth in OSA mask revenue. These strong growth numbers are helpful for the Fisher & Paykel Healthcare share price.

The company suffered from a $98.1 million negative revaluation of Karaka land, leading to the painful hit to statutory profit. The land value was impacted by its current zoning status, the higher interest-rate environment and general development land market conditions.

Owning the Karaka land “mitigates risk to future growth in light of the current uncertainty around potential development sites in Auckland”. A re-zoning application for the Karaka land will be submitted in 2024.

Net profit was also impacted by the change in New Zealand legislation removing tax deductions for the depreciation of buildings, resulting in a tax expense of $19.3 million to adjust the deferred tax liability balance.

Net profit was also impacted by the voluntary limited recall of Airvo 2 and myAirvo 2 devices manufactured before 14 August 2017. The company had estimated this cost at $12 million, but early responses from customers indicated the number of remaining devices affected by the recall, and the cost of the recall was revised to $20 million.

Outlook for the Fisher & Paykel Healthcare share price

The company provided guidance for FY25. It’s expecting revenue to be in the range of $1.9 billion to $2 billion (up from $1.74 billion), while NPAT is predicted to be between $310 million to $360 million. It reported underlying NPAT of $264.4 million for FY24.

It’s good to see the business is expecting solid growth numbers for the next financial year, though the market has already taken the growth into account, so I wouldn’t call it a hidden opportunity. I’d be happy if I were a long-term shareholder, but I personally wouldn’t choose this moment to invest because of the positivity built into the Fisher & Paykel share price.

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