Hearing device maker Cochlear has revealed a sharp hit to earnings from the fallout from China’s continuing coronavirus crisis.
The company told the ASX yesterday it will take a profit hit of up to $30 million for the 2019-20 June financial year.
The company cut its profit guidance for 2020 of $290 million to $300 million, to $270 million to $290 million.
The lower revised guidance of $270 million to $290 million, however, it is still a 2% to 9% gain on the 208-19 earnings.
The shares fell to a low of around $232, down nearly 5% before a small rebound saw them close at $236.47, down 3.4%.
Cochlear said hospitals across China, Hong Kong, and Taiwan were deferring surgeries, including operations to implant its hearing devices, to limit the risk of coronavirus infection.
“It has become clear that the coronavirus will impact the number of cochlear implant surgeries in Greater China, a top-five market for Cochlear,” Cochlear chief executive Dig Howitt said in a statement to the ASX.
“While we cannot predict how long surgeries will be delayed, the low end of guidance factors in a significant decline in sales for Greater China for the second half.”
Mr. Howitt said that during the SARS epidemic (16-17 years ago) Cochlear’s sales fell for three months but then bounced back as the backlog of deferred surgeries cleared.
Cochlear said it was assuming that there was no impact on sales outside of Greater China and that the epidemic doesn’t disrupt its supply chain.
The company relies on sound processors and accessories made in China but says it has three months of inventory of most components and expects its Chinese suppliers to resume production soon.
