Cochlear surpasses expectations

Company News

by Glenn Dyer

Earlier this month, hearing implant giant Cochlear (ASX:COH) surprised investors with a significant upgrade to revenue growth and earnings for the six months to December, along with higher guidance for the year to June 30. Today, it has followed up with the actual figures for the six months to December, along with a higher dividend.

The interim dividend was lifted by 29% to $2 a share—reaching Commonwealth Bank-like levels—from $1.55 a share a year ago. With the higher guidance, shareholders can anticipate a higher final dividend than the $1.75 a share paid in 2023. The payout equaled 69% of underlying net profit, which stood at $192 million.

The company confirmed the 26% to 31% jump in underlying net profit guidance range upgrade for 2023-24 to $385-400 million, as revealed in the February 8 upgrade.

Sales revenue for the December half surged by 25% (20% in constant currency) to $1.113 billion, driven by strong growth in cochlear implants and sound processor upgrades. Cochlear reported a 14% increase in sales of its implant units, attributing it to recent market share gains and strong market growth across developed and emerging markets.

Services revenue also saw a notable increase of 35% (29% in CC), propelled by strong upgrade demand for the recently released Cochlear™ Nucleus® 8 Sound Processor.

Statutory net profit increased by 35% (21% in constant currency) to $191 million, while underlying net profit was up by 35% (21% in CC) to $192 million.

Looking at its business, Cochlear noted a 14% increase in sales of its implants, reaching 24,193 units, with robust growth across developed and emerging markets. Sales revenue soared by 26% (22% in CC) to $648.5 million, with comparable average selling prices rising by approximately 3% in CC.

In developed markets, unit sales grew by around 15%, driven by market share gains following the launch of the Nucleus® 8 Sound Processor, as well as overall market growth. Emerging markets also performed well, with unit sales growing by around 10% across various countries.

Services revenue saw a remarkable increase of 35% (29% in CC) to $348.9 million, with strong uptake of the new sound processor across developed markets and growing rates of sound processor upgrade penetration in emerging markets.

Acoustics revenue experienced a slight decline of 4% (down 9% in CC) to $116.0 million, mainly due to lower demand for Cochlear™ Baha® 6 Max Sound Processors. However, the company revealed strong demand for the Tesla 3 MRI compatible Cochlear™ Osia® 2 System, launched in the US late in the half, particularly in December.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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