F&P Healthcare trims $23m of debt

Fisher & Paykel Healthcare, the maker of respirators and breathing masks, trimmed some $23 million of debt from its balance sheet after realising some gains in its forward exchange hedge book.  

The company closed out some US$47 million of forward contracts due to mature in 2012 and 2013 at a cash gain of $23 million, which it used to pay off outstanding debt. It has another $77 million of unrealised mark-to-market gains on its hedge book, of which $55 million is in US dollars.

F&P Healthcare increased its US dollar holdings at the start of the year, when the kiwi traded below 55 US cents. The kiwi dollar has surged almost 50% from its sub-50 US cents low in March. 

“Now that the kiwi’s well-above its long-term average we thought it was a good time to take cover on that side of the book,” Tony Barclay, chief financial officer, told BusinessWire.

“Under the IFRS accounting system, we hold the gains in those years where the exposure still is, and it gives us another 18 months to see the exchange rate get a bit better.”  

Shares of the company rose 1% to $3 today and have sunk about 7.5% in the past month on concern the surging kiwi dollar will erode the value of overseas revenue. Almost 80% of its sales are in US dollars.

F&P Healthcare will take advantage of any further gains in the kiwi against the US dollar to reduce its bank debt, though Barclay wasn’t willing to divulge the next level where the company will realise more gains.  

In August, the manufacturer announced forecast a 25% gain earnings growth in 2010, with rising sales expected to counteract the impact of a strong kiwi dollar.  

Businesswire.co.nz

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