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October 22, 2002

Cochlear upbeat despite 40pc fall

From: ABC Online, Australia
Oct. 22, 2002

Christine Lacy

Cochlear, the world's largest maker of hearing implants, has faced its shareholders at its annual meeting in Sydney. Directors were upbeat despite a 40 per cent fall in the company's stock price over the past year on repeated meningitis scares.

Christine Lacy reports on what was also David Penington's final meeting as chairman.

CHRISTINE LACY: Retiring chairman Professor David Penington wasted no time yesterday at the company's seventh annual meeting, turning up the volume on Cochlear's much-needed good news.

PROFESSOR DAVID PENINGTON, RETIRING CHAIRMAN, COCHLEAR: We are confident that in the first half of this financial year, we will see an increase in earnings per share of around 40 per cent, compared with the corresponding previous period.

And indeed, we expect the earnings per share to the end of the full year, this financial year, to be of a similar order.

CHRISTINE LACY: That upgrade was from a previous forecast of 25 per cent growth in earnings per share this year.

The news sent Cochlear stocks surging more than 13 per cent to $33.93.

Professor Penington, chief executive Jack O'Mahony and incoming chairman Tommie Bergman, were at pains to differentiate Cochlear from its American rival.

Implants made by Advanced Bionics Corporation were withdrawn from the market earlier this year on health concerns.

PROFESSOR DAVID PENINGTON: The release from the FDA confirms that there is no problem with the Cochlear Limited nucleus implant and indeed, that's how the market is now behaving.

All of the indications are that our market share has risen. We were previously just below 65 per cent of the world market and we believe we are now approaching 70 per cent.

CHRISTINE LACY: But the detail over the past year has failed to trickle down to spooked investors and residual fears see Cochlear shares off more than $14 from this time last year.

PROFESSOR DAVID PENINGTON: It's not fully understood by the community at large and there is certainly, in general terms, some fear about the possibility of meningitis.

But I suspect that's part of the problem with the share price, when you have a company with high price earnings ratios, such as we have had, people are fearful of just anything.

CHRISTINE LACY: But this 72-year-old outgoing chairman of the board denies his exit after seven years, is getting out just as the going gets tough.

PROFESSOR DAVID PENINGTON: There has to come a time when it's appropriate to stand aside, but I am proud to be leaving the company in such good shape.

CHRISTINE LACY: Christine Lacy, Business Breakfast.

Please note: Transcripts on this website are created by an independent transcription service. The ABC does not warrant the accuracy of the transcripts.

© 2002 ABC