The market gave hearing implant company Cochlear a bit of a bashing yesterday, marking down the shares by more than 4% (or $1.93) at one stage on slowing growth and earnings.
A 15% lift in annual profit wasn’t enough for investors who pushed the shares down to $45.30, despite the company telling the market that it expects to again post double digit earnings in the current financial year.
The shares were off most of the day before a late turnaround saw then close up 32c at $47.14.
After a year or more of being hit by the rising value of the Aussie dollar, Cochlear is no doubt anticipating the positive benefit from the current 11% slide in the value of the Australian dollar. If that continues for most of this half, the company could be set up for a better than expected outcome.
The currency has plunged from around 98.50 USc last month to 87.70 in Australia yesterday.
Net profit for the year ended June 30 was $115.23 million, up from $100.13 million the in previous year.
Core earnings also rose 15%, to $123.71 million, which was at the bottom of its guidance for growth of between 15% and 20% and the slowest growth in four years as the stronger Australian dollar hit home.
Investors saw a slowdown in the second half, helped by the rise in the value of the Australian dollar, while sales growth was lumpy as well.
Sales of implants in the important markets in the America’s fell after 2007’s surge on the back of a series of upgrades among existing patients.
Sales growth in Europe slowed to 21% from 23% in 2007 while growth in Asia-Pacific dropped to 14% in the latest year from 34%.
Cochlear said it delivered about 700 implants to China last year under a contract to supply more than 15,000 of the devices over six years.
"This irregular pattern of demand is anticipated to continue," Cochlear said in the statement.
But chief executive Chris Roberts said the company is "confident about the continuing growth story, our ability to enhance shareholder value and importantly the positive life changing benefits we deliver to recipients.
"In financial year 2009 Cochlear again anticipates double digit core earnings growth with a bias towards profit delivery in the second half."
He said that after stripping away the significant impact of the appreciation of the Australian dollar during the year, sales were up 18% in constant currency terms.
"This strong result confirms our growth strategy," said Dr Roberts.
"Importantly, it was achieved in a year of a higher Australian dollar, rising interest rates and an unsettled global economic environment, particularly in the USA."
During 2007/08, Cochlear’s revenue grew 8% to $601.7 million.
"The result was on the back of record sales of the cochlear implant units, improved margins and a disciplined approach to expenses," Dr Roberts said.
Sales of its cochlear implants during the year totalled $504.8 million, up 5%.
Cochlear declared a final dividend of 80c, up from 70c in the previous corresponding period, taking the full year payout to $1.50, up 20%.
