Sonic flags cost-cutting as US stagnation weighs on bottom line
SONIC Healthcare will be under pressure to reach its full-year forecast after admitting it had been hit by "unprecedented" stagnant growth in the US.
It also flagged possible cost-cutting to its Australian and US operations.
The Sydney-based pathology giant posted a lift in first-half profits, but warned its full-year result would be at the lower end of guidance. It blamed unexpected pathology fee cuts in the US and lower than expected growth as a result of superstorm Sandy for the cautious outlook.
On a constant currency basis, Sonic's profit was up 9 per cent to $155 million for the six months to December 31.
Chief executive Colin Goldschmidt said the business was battling harsh conditions in the US. "Whether this is related to unemployment or other reasons we're not sure, but nevertheless there's now been more than one year of flat-to-slightly-positive market growth in the US," he said. "We don't know when this is going to turn around but it's an almost unprecedented time."
Sonic shares fell sharply on the news to close $1.18 lower at $12.86.
Sonic Healthcare provides medical testing and X-rays for doctors and employs about 25,000 people in Australia, Europe and the US.
About a third of its revenue comes from Australia and a quarter from the US.
Sonic posted an interim dividend of 25¢ per share, up 4 per cent.