Market News 1 December 2025

Johnny Lee writes:

Fisher and Paykel Healthcare

Fisher and Paykel Healthcare is set to end the year on a high, after a strong half year result was welcomed by investors and analysts alike.

FPH, like many of our growth companies, has struggled this year. However, the rally following the result has sent it modestly higher for the year.

Revenue climbed 14%, while net profit rose 39%. On a constant currency basis, net profit rose 28%.

Hospital revenues climbed 17 % and have now recovered beyond the levels achieved during COVID. Consumables including ventilation equipment and masks remain the core driver of these gains.

Homecare revenues rose 10% and continue a multi year trend of reliable growth.

Margins have improved, with gross margin now at 62.9%. The balance sheet remains strong, with net cash of $237 million. Full year capital expenditure is less than half this amount.

The dividend increased from 18.5 to 19 cents, continuing a long term pattern of gradual annual rises. The annual dividend of 43 cents compares to just 14.7 cents a decade ago.

Forward outlook remains strong. The company is forecasting full year revenue of around $2.22 billion and a net profit of around $435 million. This compares to the 2025 full year result of $2.02 billion and $377 million.

The company has ample cash, a large pipeline of new products, favourable demographic tailwinds and a dominant position in a sector with high barriers to entry. Despite 2025 being a difficult year for growth stocks, long term expectations for Fisher and Paykel remain very strong.

FPH is our largest listed company by market capitalisation and looks set to maintain that position. Despite entering the result with high expectations, the company still surpassed forecasts and continues to plan for long term leadership in respiratory healthcare.

Contact Energy

Contact Energy has released its new Contact31+ strategy, introduced at last week’s Capital Markets Day.

Contact31+ follows the completion of its previous Contact26 strategy from 2021. Since 2021, earnings are up 77%, the annual dividend is up 14% and the portfolio is expected to be more than 95% renewable, well ahead of the 81% level in 2021.

The new strategy is based on a rising national demand for electricity, led by four main drivers: data centres, dairy electrification, metals processing and residential consumption.

Supply will need to rise in parallel, and Contact intends to lead this investment response. It claims 49% of the current renewable project pipeline and 62% of known battery capacity under development.

Early mover advantage could be meaningful, although peers will closely watch Contact’s execution.

The strategy targets significant expansion across wind, solar, geothermal and battery assets. It also aims to materially lower the cost to serve customers and lift earnings and dividends. Contact is targeting a 50 cent dividend within five years, a 25% increase.

Balancing core and non core assets will be essential to maintain flexibility. Borrowing capacity is finite, meaning partnerships similar to the existing Lightsource BP joint venture may be used to fund further growth.

Contact believes it has a technological edge over peers. Two examples were highlighted: HOWARD, which optimises hydroelectricity production in response to demand spikes, and BATMAN, which optimises battery charging and discharging to match spot prices.

On the retail side, Contact plans to reduce its cost to serve through better use of AI, simpler plans and investment in customer platforms.

Over the past five years, Contact’s share price has risen 28%, dividends have increased and it completed the major acquisition of Manawa. The next five years are similarly ambitious, with significant commitments to wind, solar and battery generation. The share price hit a new annual high following the event.

Official Cash Rate

The Reserve Bank provided what is likely its final OCR statement of the year, reducing the Official Cash Rate from 2.50% to 2.25%.

A 50 point cut was not considered. The Committee voted 5–1 for a 25 point reduction. The single dissenting vote supported holding the rate.

With the decision in line with expectations, economists focused on future direction. While further cuts were not ruled out, the RBNZ now appears to be signalling the bottom of the cycle. A period of stability at current levels is now likely.

Key risks were highlighted.

Household sentiment remains subdued, with consumers cautious about spending. The Committee noted some potential short term uplift from the sale of Fonterra’s consumer brands business.

Internationally, concerns centred on the level of investment into artificial intelligence and the effect this has had on global equity prices. Rising trade barriers were also noted as a risk to global economic activity.

Swap rates and the New Zealand dollar rose after the announcement.

The RBNZ Committee next meets on February 18.

Kiwibank Tier 2 Note Offer

Kiwibank has announced an offer of Tier 2 Notes, which carry an investment grade credit rating.

The notes have a final maturity date of 12 March 2036 but are likely to be repaid at the first reset date on 12 March 2031. Similar notes from major banks, including Kiwibank, are typically repaid on the reset date. Based on current conditions, we expect an interest rate above 4.75%. 

Investors will not be charged brokerage, as Kiwibank will cover these costs. The investment statement can be found on our website.

If you would like to be added to the list for this offer, please email us with your CSN and an investment amount, and we will send through a contract note. 

The issue is open now and closes on Friday, 5 December at 10am. Payment is due no later than Wednesday 10 December.

Please note that due to demand, this issue is likely to be scaled.

Travel

5 December – Christchurch – Chris Lee

8 December – Christchurch – Chris Lee

Chris Lee & Partners Ltd