There was something of a familiar story in yesterday’s half year result from hearing implant group, Cochlear (COH) – a nice rise in sales, a nice rise in profit and an even nice rise in interim dividend, and a reconfirmed full year guidance for a profit lift of around 10% to 20%.
Sales revenue rose 4% in Australian dollars (8% in constant currency) to $604.million with the company telling investors that there was growth across all product categories and regions.
Net profit jumped 19% to $111.4 million as sales of its hearing device continuing to grow in emerging markets. Sales of Cochlear implant units were up 10% in the half year to 16,234.
Interim dividend was boosted 18% 18 per cent increase to $1.30 per share, fully franked as the company expressed its confidence about the outlook.
The company said the positive momentum the company had experienced over the past few years had continued into 2017 with strong and consistent growth in units delivered across all regions.
Cochlear said it experienced around 10% across both developed and emerging markets. The unit growth was an increase of 16% when excluding the impact of Chinese Central Government tender units. That business though remains a sore point for Cochlear with expectations that sales will be lower.
Cochlear warned that Chinese government tender purchases of implants are now expected to be below last year’s level, with a new tender expected during the current quarter.
The half year result included just 1,100 Chinese government tender units, down from around 1,700 units in the first half of 2016.
Despite that negative, the company reconfirm its full-year profit guidance, which it said continued to be between $210 million to $225 million, up about 10% to 20% from 2016.
“We continue to experience positive momentum across the business with investments made in product development and market growth initiatives expected to underpin growth in the second half,” Cochlear’s chief executive Chris Smith said yesterday.
“Emerging market units also grew around 10 per cent with continuing strong growth in India and China (outside of government tenders) with solid improvements in Latin America and Central & Eastern Europe,” he said.
“We made progress against our business priorities in the half,” Mr Smith said.
“These remain focused on growing the core, building a service business, shaping the organisation and value creation.
“Cochlear’s priorities are focused on the customer with initiatives aimed at accelerating market growth through global expansion of awareness and increased market access initiatives.”
“Cochlear continues to demonstrate its commitment to being the technology leader in our industry with ongoing investment in research and development. During the half we invested $72.2m, 12 per cent of sales revenue, with a pipeline of new products expected to be launched over the coming years,” he said in the statement.
Despite the good figures, Cochlear shares fell 3.6% to $128.95 yesterday.