Continuous disclosure

Fisher & Paykel Healthcare shares declined sharply, then rose steeply this month, thanks to the changing fortunes of the kiwi.

After a strong first-half profit, shares in the company finished last month at $3.79 - just below the 12-month high of $3.83 earlier in the month.

But from there, shares in the medical equipment-maker fell sharply as the dollar started rising on expectations that the Reserve Bank would raise interest rates, as it did last week.

As a company which exports most of its goods, Fisher & Paykel Healthcare is particularly vulnerable to a higher dollar, and its stock dropped as low at $3.32 last week.

The company is somewhat protected from strength in the kiwi by currency hedging. But most of the hedges roll off in March and, from then, Healthcare's earnings will be much more vulnerable to the currency.

If Fisher & Paykel Healthcare wants to match what it will earn in the year to March 2006 in the following year, then the dollar will have to average 60USc in the 12 months to March 2007.

As the dollar began falling again this week, Fisher & Paykel Healthcare's fortunes reversed. Its shares rose from $3.33 at the end of last week to $3.68 at yesterday's close.

The dollar, by contrast, has fallen from slightly above 71USc on Tuesday to 68.85USc yesterday.

Late last month, the medical equipment-maker reported a $3.5 million, or 12 per cent, increase in its half-year net profit to a record $31.6 million, on revenue of $135.4 million. The profit showed - regardless of what is happening with the dollar - that the underlying business is strong.

The record profit was a little better than expected and the stock rose as foreign funds bought in.