Cochlear earnings slashed by risinig Australian dollar

The company said yesterday that it now expected net profit after tax this financial year to increase by 13 per cent to $130.5 million, while its core earnings would rise 12 per cent to $137.7m.

Cochlear said it suffered foreign exchange losses of $17m with "volatility of foreign exchange rates experienced throughout the year". Last year, the company recorded a foreign exchange profit of $21.3m.

Analysts said Cochlear's downgrade was in line with expectations after the company took a hit from its complicated hedging model.

"Cochlear has taken a bit of headwind from its rolling hedging model, which is a difficult model to start with," one said.

"The company also did not have any donation sales of its implants in China. The process of identifying suitable recipients in China has been very slow-going. Until China sorts out its system of who gets the implants, it is going to take a long process to start operations.

"However, we are positive on the stock and with the production of new implants which are currently being introduced in Europe and in the US later this year, we expect earnings to pick up in 2010."

The company, which derives 90 per cent of its sales overseas, reported net profit of $69.9m in the first half of 2009 ending December 31 -- up 22 per cent on the previous corresponding half.