Fisher & Paykel Healthcare's share price dropped after the company said its profit for the first half to September would fall sharply from the same year-ago period, when demand was extraordinarily high due to the Covid-19 pandemic.

By late morning, the stock was at $19.59, down $1.56 or 7.4 per cent on Thursday's close, and compared with its record $37.68 high set in August 2020.

The respiratory products maker said its operating revenue for the first half would be about $670 million, down from $900m in the previous comparable period and net profit would fall to $85m-$95m from $222m.

The revenue forecast would represent an increase on the pre-pandemic level of $570.9m achieved in the first half of 2020.

In its last annual result announcement, F&P Healthcare detailed how it had dramatically increased production in response to the Covid-19 pandemic.

"As a result, we sold approximately 10 years' worth of hardware in two years – to hospitals all around the world," chief executive and managing director Lewis Gradon said.

Gradon said with the most recent waves of the Omicron variant, fewer patients have required hospitalisation and respiratory support.

"We believe customer stock levels have been elevated during our first half, which impacts our short-term sales.

"This does not change the fundamentals of our business or our strategy."

Gross margin for the first half is expected to be about 60 per cent - below the company's long-term target of 65 per cent.

"The pandemic continues to adversely impact gross margin due to elevated freight and Covid-19-related costs," Gradon said.

"This year, we are also experiencing some manufacturing inefficiencies, as we are carefully balancing demand fluctuations and targeted inventory levels with manufacturing throughput – while managing higher rates of absenteeism in our manufacturing workforce due to sickness.

"Although we have reduced our manufacturing cost base over the past six months, manufacturing inefficiencies are likely to persist for this financial year as demand stabilises and inventory levels reduce to our targets."

Operating expenses for the first half were expected to grow by about 5 per cent in constant currency terms.

"There are ongoing uncertainties around our customers' inventory levels, their staffing challenges and their current capacity for adopting clinical change. We also do not know to what extent respiratory therapies will be required during the Northern Hemisphere winter," Gradon said.

"For those reasons, we are not currently providing quantitative revenue or earnings guidance for the full 2023 financial year."

However, Gradon believed that second half revenue for the 2023 financial year would be higher than in the first half.

- Jamie Gray, NZ Herald