The Age, Australia

Child care company ABC Learning Centres Ltd has downgraded its earnings guidance for the full year, surprising investors who sent its shares down by almost five per cent.

ABC says its earnings per share (EPS) is now expected to grow by 15 per cent or more this financial year, down from an earlier forecast of growth of more than 20 per cent.

The downgrade comes as a strong Australian dollar exchange rate impacts earnings from its offshore business reporting in US dollars, pound sterling and NZ dollars.

It added that accounting treatment of other items could also impact earnings.

“Owing to the above factors, management believes that EPS growth will be 15 per cent or greater for the 2007/08 financial year,” it said.

ABC shares fell 28 cents, or 4.87 per cent, to $5.47….

“ABC confirms that its operations in Australia, New Zealand, the United States and United Kingdom are all trading to expectations in constant currency terms for the 2007/08 financial year,” it said.

ABC also said it was continuing with its program of non-material acquisitions of childcare centres.

In the meantime, the value of its 17.99 per cent investment in toy company Funtastic Ltd was declining as the share price fell.

“At 30 June … this resulted in a gain of $7 million with Funtastic’s share price at $1.85,” ABC said.

“Subsequent share price fluctuations below $1.85 will have an impact on earnings.”

ABC in August reported a net profit of $143.10 million for 2006/07, up 76 per cent on the previous year….