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April 27, 2004

Cochlear shares fall as CEO updates

From: - Australia - Apr 27, 2004

By: Adam Dawes

Cochlear Limited's (COH) new CEO Dr Chris Roberts said today that the results for the full year profit after tax are forecast to be in the range of $35m to $39m after non-recurring costs. However, the company did warn that it is coming off a disappointing December half where unit sales were down 9% from the June half.

The hearing device company also said that it would pay a final dividend of 44¢ per share.

Dr Roberts said that the fundamentals of the company, and its markets, are compelling.

"There is a large unmet clinical need for Cochlear's products for the profoundly deaf and severely hearing impaired," he added.

"Combining this with a strong global market position, continued technology leadership and an exciting product development pipeline, provides an opportunity for robust long term growth."

"As a new CEO, I've been able to take a long, hard and objective look at Cochlear's business and have made some tough, but necessary decisions," said Dr Roberts.

"The split of first half to second half unit sales in F'04 is now forecast to be similar to prior years and this will not support double-digit growth in the second half compared to the prior year."

Cochlear's CEO Review has highlighted the need to refocus on the core business activities, said Dr Roberts.

"A number of non-recurring items will be booked in the current year and the estimated total cost of these is expected to be $17m before tax and $12m after tax including headcount reduction of some 40 people."

On the outlook the CEO said that a need to refocus the Research and Developments efforts on securing our technology leadership in the cochlear implant industry.

"The immediate priority is the successful launch of System 4, which remains on schedule for release in F'05," he said.

"Research on devices to expand the indications for implantation has been prioritized and the Functional Electrical Stimulation (FES) project and work in allied areas has been cancelled."

We are proceeding with supply of product into an existing bladder control programme in Melbourne, but all other activities in peripheral areas have been halted.

"We must retain our technology leadership and this means we must not only be more innovative but also faster at bringing these innovations to market," Roberts concluded. A number of projects focused at time to market are being implemented, which will incur some one-off costs."

At 1107 AEST Cochlear Limited shares plummeted 4% or 90c to $18.52

© 2004