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Cochlear says demand for implants may struggle to pick-up in virus-hit China
[BENGALURU] Australian hearing implant maker Cochlear Ltd said on Tuesday that demand for hearing implants will struggle to catch-up in China as the coronavirus crisis delays surgeries.
The company's warning comes as it braces for a drop in demand for the month of March, traditionally its biggest month of sales in China, where hospitals are putting off surgeries.
"The longer it goes on, the greater the backlog across not only cochlear implants, but other surgical interventions and, therefore, the longer it will take to catch back," Chief Executive Officer Digg Howitt told Reuters in an interview.
Last week, Cochlear, whose shares are the second most expensive in Australia, cut its full-year profit forecast due to surgical delays, also in Hong Kong and Taiwan.
The company on Tuesday reported underlying profit of A$132.7 million (S$123.64 million) for the six months ended Dec. 31, slightly above the A$132.1 million it posted a year earlier. Revenue from the sale of implants climbed 14 per cent to A$469.9 million in the same period.
The Sydney-based company does not give a breakdown of China sales but calls it one of its top five markets.
Shares closed down 3.4 per cent at A$226.62.
Mr Howitt said there have been some delays in the construction of a factory in China, though he does not expect a big impact to the timeline for completion or a surge in costs.
Underlying profit for fiscal 2020 is expected between A$270 million and A$290 million, down from a prior forecast of A$290 million and A$300 million. The lower-end assumes the coronavirus impact is limited to Greater China, the company said.
It also raised its interim dividend to A$1.6 per share from A$1.55. Its profit margin was 2 percentage points lower at 17 per cent than a year ago.