Hearing aid group, Cochlear lifted dividend for the six months to December by 3% after revealing a lacklustre performance in the period.
Directors set the payout at $1.60 a share and forecast a small improvement in full-year earnings in the wake of last week’s downgrade triggered by the impact of the COVID-19 virus in China.
Cochlear trimmed its full-year profit outlook by $20 million, to $270 million to $290 million, due to the virus crisis causing surgeries to be delayed across China to avoid possible infection.
If earnings come in around the new range that would be full-year profit growth of 2% to 9% instead of more than 12% at the top of the old range.
The company on Tuesday reported an underlying profit of $132 million for the six months to December 31, which was flat on the same period a year earlier.
Statutory profit was boosted by 23% to $157 million by the one-off revaluation of Cochlear’s innovation fund, which makes small investments in companies developing new technology that might improve Cochlear’s products.
Sales revenue rose 9% higher (or 5% on a constant currency basis) to $777 million for the half – below market expectations of $790 million – with Cochlear implants up 14% but acoustics and bone conduction devices dropping 9%.
Cochlear said the company lost market share in acoustics from competitors launching new products, while sales also slowed more than expected in anticipation of Cochlear launching the new bone conduction implant.
CEO Dig Howitt said that new device, the Osia 2 System, was receiving an “enthusiastic response from surgeons and patients over the past few months” and would drive category growth.
“For the second half, Cochlear expects strong growth in cochlear implant units to continue across the developed markets, driven by growing uptake of the Nucleus Profile Plus Series cochlear implant and the continued investment in market awareness and access activities,” he said.
“Services revenue is expected to grow for the full year although at a lower rate than previous years as penetration rates of the Nucleus 7 Sound Processor reach high levels across the developed markets and the business cycles a strong FY19 result.
“Acoustics revenue is expected to decline for the full year following a decline in the first half. While the second half will benefit from the launch of the Osia 2 System in the US, the European launch is now not expected during FY20,” Mr Howitt added.
The shares lost 3.3% to $226.62.