FPH capex nearly doubled to NZ$195.2m, compressing FCF conversion

Reported revenue reached NZ$2.3b and reported net profit after tax reached NZ$468.5m; both are materially higher than FY25, but the headline growth comparators sit against an FY24 base that included disclosed abnormal-item adjustments, which limits clean year-on-year inference.

Operating cash flow grew 20.9% to NZ$663.2m, yet free cash flow only edged up to NZ$446.6m (from NZ$427.1m) because the capex step-up absorbed most of the additional operating cash. Cash on hand rose by NZ$196.6m to NZ$461.1m while gross borrowings fell to NZ$59.8m, strengthening the net cash position. The Hospital product group lifted to 65.4% of group revenue (NZ$1.5b), up two points of share from Homecare.

Capex jumped 89.5% to NZ$195.2m, taking capex intensity to 8.5% of revenue against 5.1% prior. This signals an investment-cycle restart rather than a one-off year. Investors should expect near-term FCF conversion to stay pressured until the new capacity is absorbed; the offset is that this spend underpins the hospital consumables and product launches the company is pointing to for forward growth.

Working capital release supported operating cash. Inventory days fell roughly 10 days to 51.8, and receivable days dropped to 45.4. Operating working capital was effectively flat at NZ$614m versus NZ$606m despite higher revenue, which means working capital did not consume cash as the business scaled — a positive read on inventory normalisation, but a tailwind that will be harder to repeat.

Hospital mix continued to compound. With Hospital revenue at NZ$1.5b and consumables growth cited at 16%, the higher-recurring annuity stream is doing the lifting on group revenue. Segment-level margin disclosure is not available in the supplied extraction, so the gross-margin contribution from this mix shift cannot be quantified here.

The delivered NZ$2.3b revenue and NZ$468.5m NPAT sit at or above the top of both ranges, helped by favourable FX (the release notes the guide was further revised at 31 January FX rates).

The first half delivered 47.2% of full-year revenue and 45.5% of NPAT, implying a stronger second half (NZ$1.2b revenue, NZ$255.5m NPAT). That second-half weighting is consistent with the stated seasonality. No FY27 quantitative target is supplied in the release, so the launch base for next year is not directly framed.

Operating cash flow grew 20.9% to NZ$663.2m, ahead of any reasonable read on reported earnings growth; inventory days dropped without straining supply; and the net cash position strengthened by close to NZ$200m. These point to genuine operating leverage in the hospital franchise rather than balance-sheet-assisted earnings.

The timing-driven and caveated components are larger than the headlines imply. First, FCF/NPAT fell from 113.2% to 95.3%, driven mainly by the capex step-up — investors should not extrapolate the prior conversion rate forward while capex intensity is elevated. Second, the inventory unwind contributed to operating cash flow and is unlikely to repeat at the same magnitude; future OCF growth must come from earnings rather than working-capital release. Third, reported revenue, PBT, and NPAT growth carry an analytical caveat: the FY24 comparator base contained disclosed abnormal-item adjustments, so two-year growth comparisons are basis-affected and the supplied calculation framework treats those growth percentages as caveated rather than clean. A final dividend of 33c per share was declared.

This briefing cannot assess the composition of capex between capacity expansion, maintenance, and IT, and cannot independently verify constant-currency growth or segment-level margin economics that are not disclosed in the supplied extraction.