Dollar's Rise Mutes Cochlear Growth
Sydney Morning Herald
Wednesday August 13, 2008
COCHLEAR, the maker of hearing devices, has notched up full-year profit growth of 15 per cent but the company's double-digit growth guidance for the coming year has fallen short of analysts' expectations.
The market initially appeared unimpressed by the result, pushing Cochlear shares down 4 per cent before they closed up 32c at $47.14. The chief executive, Chris Roberts, said currency movements stripped $47 million from sales revenue, paring back revenue growth from 18 per cent to 8 per cent. The high Australian dollar hurts Cochlear because more than 90 per cent of its sales but only 50 per cent of its expenses are in a foreign currency, with the balance managed through foreign exchange contracts. "It's certainly hard not to be spooked by the currency," Dr Roberts said, noting that the Australian dollar had appreciated by 14 per cent against the US dollar over the year. UBS equities analyst Dan Hurren said the 10 per cent-plus earnings growth forecast for the 2009 financial year was below his expectations but the guidance reflected an expectation of a high Australian dollar rather than the dip of the past fortnight."This would have to be one of the most resilient stocks to economic downturn," he said. Leading the sales surge was Europe, where revenue grew 30 per cent in constant currency terms, but sales in the US were flat.Dr Roberts said a slowing US economy was hurting discretionary sales."A baby born deaf needs an implant regardless of the economic cycle, but maybe an adult with one implant thinking about a bilateral ... might think twice about it," he said. The final dividend of 80c a share, payable on September 25, is up 14 per cent on a year earlier and brings the full-year dividend to $1.50 a share.
© 2008 Sydney Morning Herald