Coronavirus fears begin to hit hearing device market


market fears

© Stockcrafter - iStock

As fear and panic over a potential coronavirus pandemic send share values into free fall generally, the Australian cochlear implant producer, Cochlear, has blamed the health scare for having to cut its full-year profit forecast.

The delaying of surgical operations in China, Hong Kong, and Taiwan to limit spread of the infection means Cochlear has factored in a "significant" drop in sales for the second half of the year, and brought uncertainty about when surgeries might resume. A subsequent fall in the share value of Cochlear Ltd to around a three-month low has ensued.

Reuters quoted Credit Suisse as estimating that Greater China accounted for less than 10% of Cochlear group revenue in 2019 after its exposure was lowered in recent years by the loss of government contracts. Meanwhile, Cochlear Chief Executive Dig Howitt affirmed: "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 lowered its underlying profit forecast for fiscal 2020 to between A$270 million and A$290 million ($180.50 million - $193.87 million), from an earlier forecast of A$290 million and A$300 million, reported Nasdaq.

"We are confident that many of the delayed surgeries will progress once hospitals resume normal operations," Howitt said.

In posting its profit forecast on February 10, Cochlear's coronavirus-affected downgrading was still 2% to 9% higher than the underlying net profit the firm reported last year.

With the accelerating day-to-day spread of coronavirus, the growing repercussions of entire populations circulating less could have a big impact on all markets, including audiology. Reuters quoted JP Morgan as observing that the issue was currently a short-term one affecting only sales in China this financial year, but that the risk was that both the epidemic and resulting effects spread further afield. This is, indeed, what is happening.

"The concern ... is the potential for coronavirus to spread more widely in other regions, which would likely result in widespread deferrals," JP Morgan analysts were reported to have said.

Source: Nasdaq/Reuters