Feb. 10 (Bloomberg) -- Cochlear Ltd., the maker of the world’s biggest-selling hearing implant, reported the fastest first-half profit growth in three years as currency gains offset sluggish demand for its devices in Asia. The shares rose.

Net income climbed 22 percent to A$69.9 million ($47.4 million), or A$1.25 a share, in the six months ended Dec. 31 from A$57.1 million, or A$1.03 cents a share, a year earlier, Sydney- based Cochlear said today in a statement to the Australian stock exchange.

Cochlear, which generates more than 90 percent of its sales in foreign currencies, booked A$12.8 million in gains as the U.S. dollar and euro strengthened against the Australian currency. That boosted earnings and offset the slowest growth in demand for new implants in five years after record gains a year earlier.

“The market has struggled to get to grips with the lumpiness of the implant business,” said Donald Williams, who helps manage about $740 million of assets, including about $20 million of Cochlear shares, as chief investment officer at Sydney-based Platypus Asset Management Ltd. “Investors just have to get used to the idea that it doesn’t grow at 10 to 15 percent in a straight line,” he said in a telephone interview today.

Cochlear advanced A$2.30, or 4.4 percent, to A$55.66, the biggest gain in Australia’s S&P/ASX 200 Health-Care Index of nine companies. The stock has declined 19 percent in the past 12 months, compared with a 38 percent slump in the broader index.

Currency Gains

The U.S. currency averaged 77.9 cents per Australian dollar in July to December, 11 percent more than a year earlier, and the euro averaged 55 cents per Aussie, 12 percent more.

Cochlear’s implants, which require a trained surgeon to install, help restore hearing to people with severe to profound hearing loss. A processor behind the ear picks up sounds and converts them into digital signals it sends to a receiver implanted in the cochlea, a snail shell-shaped bone in the inner ear. That stimulates the auditory nerve and the brain perceives the signals as sound.

Revenue gained 19 percent to A$355.2 million, while the number of new implants sold rose 2 percent, the slowest half-year increase since the six months ended June 2004. Unit sales in the Asia-Pacific region fell as a contract to supply 15,000 implants to China over six years stalled and distributors reduced orders, Chief Executive Officer Chris Roberts told reporters on a conference call today.

“In this time of economic uncertainty, definitely people have managed their stock down,” Roberts said. “We think there’s been quite a bit of destocking in certain regions, not just Asia- Pacific, but certain areas within Europe as well.”

Still, the global economic slowdown has had a “relatively minor impact” on Cochlear’s major customers, Roberts said, adding he expects full-year profit to rise 15 percent to 20 percent, compared with the 10 percent to 20 percent range he gave at the company’s annual general meeting in October.

Cochlear will pay an interim dividend of 80 cents on March 17, 14 percent more than the dividend of 70 cents the company paid for the same period last year.

To contact the reporter on this story: Simeon Bennett in Singapore at sbennett9@bloomberg.net.

Last Updated: February 10, 2009 01:02 EST