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NZ dollar rally may limit profit gains for Fisher and Paykel Healthcare, brokerage says

Thursday 26th September 2013

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Recent gains in the New Zealand dollar may limit profit gains at medical device maker Fisher & Paykel Healthcare Corp., which exports about 99 percent of its products.

Brokerage Craigs Investment Partners trimmed back its expectations for the company's 2014 and 2015 profit, citing a rally in the New Zealand dollar the past month from 77 US cents to about 82 cents, and a gain against the euro from 58 cents to about 61 cents.

The brokerage cut its forecast for profit in the year ending March 31 to $95 million from an earlier estimate or $97 million, it said in a note today. Auckland-based Fisher & Paykel, which makes breathing masks and respirators, said a month ago that 2014 profit would likely be $90 million to $95 million, compared with $77 million in 2013. Craigs also cut its forecast for 2015 profit to $91 million from $99 million.

"The impact is muted in FY14 given we are already half way through the year and Fisher & Paykel Healthcare is about 90 percent hedged, but the impact is greater from FY15 where hedging protection is lower," analysts Stephen Ridgewell, Chris Byrne and Bryant Cheong said in the note.

Fisher & Paykel has hedged 92 percent of its US dollar exposure in the 2014 financial year at an average rate of 77 US cents, and 90 percent of its euro exposure at an average rate of 48 euro cents, according to the brokerage. In 2015, the company has hedged just 44 percent of its US dollar exposure at an average rate of 79 US cents and 60 percent of its euro exposure at an average rate of 46 euro cents.

Shares in Fisher & Paykel Healthcare edged up 0.6 percent to $3.68, taking their gain so far this year to 48 percent. Craigs, which rates the stock a "buy", increased its 12-month target price for the shares to $4.60 from $4.45, citing sales growth from new respiratory products.

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