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Sonic to weather spending cuts but warns of hit from interest rate burden

SONIC HEALTHCARE says it can weather spending cuts across the northern hemisphere as US and European leaders battle to rein in spiralling government debt.

SONIC HEALTHCARE says it can weather spending cuts across the northern hemisphere as US and European leaders battle to rein in spiralling government debt.

But Sonic expects to be hurt by rising interest rates on its $1.7 billion debt, with the ASX-listed pathology dynamo facing a 30 per cent rise. Sonic posted a 0.4 per cent increase in full year net profit to $295 million yesterday. The figure was rosier in constant currency terms, rising 6.1 per cent to $311 million.

The chief executive, Colin Goldschmidt, said a high dollar ripped about $200 million from revenue, which rose 3 per cent to $3.096 billion. Dr Goldschmidt expected the dollar's rise to ease this financial year and said the company was well placed to combat any health cuts across the northern hemisphere.

Sonic expects interest rate pain, as the terms of loans, with some at rates as low as 2 per cent, borrowed before the financial crisis struck in 2008 come to an end.

Sonic warned investors yesterday its repayments would be 30 per cent above the $65 million interest charges it paid in 2010-11.

Dr Goldschmidt said Sonic's local pathology business had rebounded in the second half of 2010-11, with revenue up 6 per cent, after suffering soft demand and government fee cuts for the past two years.


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