Add Category
The global semiconductor shortage has curbed ResMed’s ability to meet surging customer demand, but chief executive Mick Farrell is looking beyond the current supply chain crunch.
Revenues at the sleep treatments maker were up 14 per cent in constant currency terms at $US864.5 million ($1.2 billion) for the three months to March, while income from operations rose 5 per cent to $US234.3 million.
However, the company was forced to shave $US100 million off its predictions for the extra revenues it can make by winning new customers after a recall at competitor Philips left millions of patients in need of sleep apnoea devices.
ResMed has benefitted from a Philips recall which affected more than 3 million devices.
Mr Farrell told The Sydney Morning Herald and The Age that while the company had been forecasting extra revenues of between $US300 million and $US350 million because of the rival’s recall, those projections had been wound back to between $US200 million and $US250 million. This was largely due to chip suppliers “decommiting” - or winding back - orders made a year ago because they had no semiconductors chips to sell.
“It blows me away, I have never had that problem before,” Farrell said.
However, he said ResMed is expecting to capture more revenue from former Philips patients in the next few years as supply chain concerns resolve themselves. The company is hoping to hold on to the former Philips customers they have acquired during this period.
“I think the vast majority of the share that we take from them [Philips], they will never get back,” Farrell said.
ResMed shares fell sharply at Friday’s open and were down 5.1 per cent to $28.84. The company’s numbers slightly missed some analyst consensus forecasts, though some analysts had warned that the market was not fully pricing in the possibility that the company would have to reduce forecast revenue gained from the Philips recall.
“We believe this risk [was] well understood but not fully reflected in fourth-quarter estimates. We remain comfortable that this is largely a timing issue and ResMed remains well positioned,” JP Morgan analyst David Low said.