Analysis
Fisher & Paykel Healthcare (FPH) identified a direct financial headwind from U.S. tariffs introduced in 2025, specifically targeting hospital products sourced from New Zealand. In the first half of the 2026 financial year (ended September 30, 2025), these tariffs reduced the company's gross margin by 32 basis points. For the full 2026 financial year, the company expects the impact to widen to approximately 75 basis points, with an annualized steady-state impact of roughly 130 basis points if current global tariffs remain in effect.
The company's primary mitigation strategy relies on internal efficiency gains and manufacturing improvements rather than pricing adjustments. FPH indicated that its ongoing gross margin improvement efforts are expected to more than offset the tariff headwind, leading to a projected overall gross margin increase of 50 basis points for FY2026. Management has explicitly avoided aggressive price increases to counter tariffs, preferring to focus on its long-term strategy of changing clinical practice and increasing therapy penetration.
The impact is currently concentrated on hospital products exported from New Zealand to the United States. Products manufactured at the company's campus in Tijuana, Mexico, and its facility in Guangzhou, China, were not identified as subject to these specific tariffs as of late 2025. While management acknowledged the "ongoing tariff investigation" potentially affecting other regions, they have not yet disclosed specific financial estimates for a scenario where Mexico-sourced products become subject to similar duties.
Operational impacts on the ground have been described by management as "no material impact," with tariffs being treated as another component of the company's cost of goods sold. The company maintains a strong net cash position and has not adjusted its capital expenditure plans, including the construction of its fifth building in Auckland, due to tariff-related costs. Transcript 1H-2026, Earnings Press Release 1H-2026
Data
(NZ$M, unless otherwise stated)
| Metric | 1H26A | FY26E | Annualized E |
|---|---|---|---|
| Gross Margin Headwind (bps) | 32 | 75 | 130 |
| Estimated Net Tariff Cost | $3.5 | $16.3 – $17.0 | $28.2 – $29.5 |
Source: Transcript 1H-2026, Earnings Press Release 1H-2026, Marvin Labs
Financial Impact
- Cost Impact (Historic): NZ$3.5M
- Cost Impact (Forward-Looking): NZ$16M–NZ$17M
Sources
U.S. tariffs on hospital products sourced from New Zealand impacted our gross margins by 32 basis points in this half. If the current global tariffs remain in effect as they currently are, our gross margin would be impacted by approximately 130 basis points on an annualized basis, with approximately 75 basis points impacting in the 2026 full financial year.
We're thinking of it as just another cost, just like all other costs, and it's in the bag of just business as usual costs. We're running the business as we normally would. We're running our continuous improvement projects as we normally would. Today, I'd say really no material impact on the ground at all.
Our ongoing improvement efforts are anticipated to more than offset this, to provide an overall gross margin improvement for the full-year FY 2026 of roughly 50 basis points.