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Abano trims full-year profit guidance as ACC referrals drop; dividend maintained

Wednesday 31st March 2010

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Abano Healthcare Group said second-half earnings will be “softer than planned” because of a drop in ACC referrals and a temporary slowdown in Australian Audiology. The company will maintain its annual dividend payment at 21 cents.

Sales in the year ending May 31 will be $175 million to $180 million, down from $187 million in 2009, the company said in a statement today. Net income will be $4 million to $4.5 million, down from a year-earlier $9.7 million. The guidance excludes the one-time gain from the sale of Bay Audiology.

Profit soared in the first-half, reflecting a net gain on the sale of Bay Audiology of $76.6 million. Disposing of the asset, though, carved a hole in Abano’s revenue which it is now trying to fill. The company announced acquisitions today including a dental practice in Dunedin, Orthotics South Island, two dental practices in Australia’s Coffs Harbour, in northern New South Wales and a new clinic in Robina. It gave no price details.

“We are in a phase of rebuilding these earnings, primarily through Dental in the near term, while investing in Audiology in Australia and Asia,” said managing director Alan Clarke.

Shares of Abano fell 1.9% to $5.30 and have declined 20% in the past six months. The stock is rated a ‘buy’ based on two recommendations compiled by Reuters.

Earnings per share will be lower than planned in the full year after the company’s share buyback and cancellation offer was undersubscribed, leaving Abano with 4.8 million more shares than planned at 20.9 million, it said today.

The company will shortly announce an on-market share buyback programme to trim back shares on issue and has amended its dividend policy for 2010, so that its payments to shareholders match last year’s rather than being 50% of net profit.

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